F U G O P

A Reality-Based Blog.

Atom Feed

Friends

Good Blogs

Not So Good Blogs

News Sources

Profile

 

1/10/2005

Al Hubbard

While I'm praising Nina Easton, I might as well quote her insights on Allan Hubbard, just announced by Bush as both the new director of his National Economic Council and assistant to the president for economic policy.

[Dan Quayle's] Competitiveness Council, a continuation of the deregulatory campaign George Bush had waged as vice president, wielded enormous power. It could short-circuit regulatory processes by overruling the decisions of such familiar authorities as the Environmental Protection Agency and the Food and Drug Administration. The council wasn't required to divulge its proceedings or its contacts with outside lobbyists as agencies were. Officially, the council was chaired by the vice president and consisted of half a dozen cabinet secretaries and agency heads. Its executive director, an Indianapolis car-wax mogul named Alan (sic) Hubbard, was David [MacIntosh's] boss. But Hubbard had other pressing duties as deputy to [Bill] Kristol. The day-to-day operations fo the Competitiveness Council were run by David, who served as deputy director, and a handful of staffers.

Congressional Democrats took one look at the council and concluded it was a backdoor channel for business lobbyists who couldn't get their way with regulators: Whe developers complained to Quayle about President Bush's pledge that he would countenance 'no loss of wetlands,' the Council set out to change the definition of wetlands, taking millions of acres out from under federal protection. United Parcel Service complained that a proposed Federal Aviation Administration rule to reduce airplane noise would hurt the company, and the Council went to work to relax the agency's timetable. Eli Lilly, a generous contributor to Quayle's Senate campaigns, complained that it needed more 'operational flexibility' to meet new clean air standards, and the Council overruled the EPA and issued a rule that critics said would increase pollutant emissions by 245 tons a year.[235-236]
None of Easton's comments should be surprising to anyone who's followed Bush's pattern of appointments. What's remarkable though, is how neatly he serves as an archetypal administration appointee: he is a true-believer movement conservative, a Bush family loyalist, a secrecy fetishist, and unabashed expert at elevating private interest over the public trust.

Initial coverage of the appointment has noted Hubbard's familial loyalty to the Bush dynasty. Warren Veith of the Los Angeles Times reports that the Hubbard appointment "signaled that Bush was assembling a team of trusted loyalists to sell his second-term economic priorities, including Social Security restructuring and changes to the tax code." Hubbard, a "longtime friend of the Bush family who has been in "close personal contact [with Bush] for decades," is the proud owner of the Bush nickname "Hubbs," which he may have earned while a classmate of Bush's at Harvard Business School.

Both Hubbard and his wife, Kathy, are Rangers (they each raised over $200,000 for Bush's re-election) in the 2004 cycle – combined with their 2000 contributions, they've given over $600,000 to Bush. (Do you stop being a Ranger when the campaign ends, or is someone a Ranger forever?)

"Hubbard was a domestic policy adviser for Bush's 2000 campaign and participated in Bush's economic forum in Waco in 2002," according to the Indy Star. He has vouched for a number of top-level administration appointees, serving as a consigliere of sorts. The honor roll includes Larry Lindsey, Hubbard's predecessor at the NEC, Mitch Daniels, former head of OMB, and Michael Gerson, the recently repositioned religious raconteur. [|cite]

Owen Ullmann, Business Week, March 22, 1999 ("Even though Lawrence B. Lindsey worked for George Bush for years, the President's son, George W., didn't get to know the economist until last summer. That's when Lindsey was invited to the Texas governor's mansion in Austin to audition for the job of top economic adviser to a then-hypothetical Bush Presidential campaign. The meeting had been arranged by Indianapolis businessman Al Hubbard, a classmate of Bush at Harvard Business School who got to know Lindsey while working on Vice-President Dan Quayle's White House staff. 'They hit it off right away,' says Hubbard.").

Hubbard is undoubtedly a true believer in the conservative movement. While Bush was drinking and carousing in the late seventies, Hubbard was raising money with his wife for Dan Quayle's 1980 Senatorial campaign. Hubbard managed Delaware Governor Pierre "Pete" du Pont IV's 1988 presidential campaign.

During George H.W. Bush's administration, Quayle's office was a hotbed of conservative radicalism. Bill Kristol was his chief of staff, and Norquist had significant input on economic policy. The Quayle reaction to Bush Sr.'s tax increases was repudiation and escalation of it's anti-regulatory fervor. Hubbard came to the Competitiveness Council during this febrile time, and immediately surrounded himself with libertarian fellow travellers like David MacIntosh. They used their power, unfettered by law or principle, to aid big business. [|cites]

Pre-Council Years
Bob Woodward and David S. Broder, Quayle's Quest: Curb Rules, Leave 'No Fingerprints,' The Washington Post, January 9, 1992 (A1): The council was relatively inactive until mid-1990, when Bush and the business community perceived backsliding from the Reagan administration's deregulatory victories. Directly charged by the president to address the issue more actively, Quayle hired Allan B. Hubbard as the council's executive director. A graduate of both Harvard law and business schools, and the multimillionaire part owner of an Indiana chemical company, Hubbard had managed former Delaware governor Pierre S. "Pete" du Pont IV's bid for the 1988 presidential nomination. Hubbard's wife, Kathy, had been Quayle's chief fund-raiser in his 1980 Senate campaign.
The Council
Ann Devroy and David S. Broder, Quayle Pressured Agencies to Ease Rules on Business, Groups Say, The Washington Post, September 8, 1991 (A6): The council is the direct successor to Reagan's Task Force on Regulatory Relief, which Bush chaired when he was vice president. It includes the director of the Office of Management and Budget, the secretaries of Treasury and Commerce, the chairman of the President's Council of Economic Advisers, the attorney general and White House chief of staff.

Created by executive order, the council's stated purpose is to promote U.S. economic competitiveness, but the study charges that the Bush administration, like the Reagan administration, equates competitiveness with deregulation.
Bob Woodward and David S. Broder, Quayle's Quest: Curb Rules, Leave 'No Fingerprints,' The Washington Post, January 9, 1992 (A1): Like others in the libertarian wing of the Republican Party, Hubbard is a strong believer in the efficiency of the free market. "We want to make sure the regulations are consistent with the statutes," he said in an interview. "But we also want to be sure they are the least burdensome to the economy, to protect American competitiveness and preserve American jobs."

As his deputy, Hubbard selected another ardent advocate of free-market economics, David M. McIntosh, a 1983 graduate of the University of Chicago law school and alumnus of the Justice Department.

"Hubbard and McIntosh are the driving force" at the council, said one White House official. Quayle said he encourages and fully supports their conservative activism.

One of Hubbard's first moves as executive director was to ask OMB's Office of Information and Regulatory Affairs for a list of issues on which the agencies had been dragging their feet.

Hubbard and McIntosh began applying the heat to agency lawyers in phone calls or meetings to resolve these issues. Hubbard met personally with the number two officials in many agencies and departments, calling on Quayle to talk to the appropriate Cabinet secretaries when Hubbard was not satisfied.

Word quickly spread through the business community that the Competitiveness Council was ready and able to help on regulatory matters, and its agenda filled up.
See also The George Bush Presidential Library background on the Competitiveness Council.

Post Council Years
Dan Balz, Ann Devroy, and Howard Kurtz, Quayle Aide Hubbard Given Political Role, The Washington Post, January 23, 1992: Vice President Quayle has no intention of repeating his 1988 campaign experience when he felt he was at the mercy of Bush aides. Yesterday, his office announced that Allan B. Hubbard, Quayle's deputy chief of staff and controversial director of the Council on Competitiveness, will be assuming an "expanded" role for Quayle, "with special emphasis" on politics. David MacIntosh, the council's deputy director, becomes director.

Quayle also will have his own guy at the campaign headquarters. James L. Pitts, the vice president's political director, is leaving Quayle's staff to become a political director at the Bush-Quayle campaign.
Note that both Pitts and MacIntosh have been quoted extensively on Hubbard's recent appointment.

The Competitiveness Council operated in near complete secrecy. Henry Waxman called it a "nefarious, secret kind of government outside the constitutional and democratic processes for enacting laws." [Easton, 236] Sen. John Glenn's introduced the Regulatory Review Sunshine Act in direct reaction to the council's subterfuge. Two very good watchdog groups, OMB Watch and Public Citizen's Congress Watch, cried foul, releasing an influential report, which I'm picking up from OMB Watch's office in a couple of hours. The council was proud of its "no fingerprints" approach to undermining regulations and regulatory agencies, actually trumpeting their stealth to sympathetic audiences.

The corruption-enabling secrecy surrounding the council was best illustrated by its undermining of wetlands protections. During the 1988 campaign, George H.W. Bush promised "no net loss" of wetlands during his administration. Quayle and Hubbard broke Bush's promise by backstabbing the pro-conservation EPA Administrator, William K. Reilly. As Reilly was driving to a hearing on strengthening wetlands protections, he received a call from Hubbard withdrawing the White House's support for Reilly's position, hanging him out to dry. Contemporaneous reporting was muddled, and Hubbard refused to comment.

Another good example of secrecy was the council's undermining of the 1990 Airport Noise and Capacity Act, which required quieter airline fleets by the year 2000. Agencies wanted a strict interpretation of the rule, while industry wanted a loose interpretation. Hubbard intervened with the FAA, browbeating it into accepting the industry interpretation. Watchdog groups and media had little idea that Hubbard and the council had been behind the pro-industry rule, which "was just as Quayle wanted it. His staff had discussed the possibility of publicizing his part in the decision and decided not to, because they recognized it was a 'political loser,' as one of Quayle's aides said. 'Millions of people hate airplane noise, and there was no benefit to be derived from being associated with the decision that would mean more noise longer,' the aide said."

When the council's machinations began to leak out, Hubbard advanced a by-now familiar argument: that the White House's intervention into the agency rulemaking process was protected by executive privilege, and that alternately, "confidential communications between the president and his aides are not subject to congressional or public scrutiny." These claims, advanced by the current White House at every turn, are what inspired Glenn's failed Sunshine Act. [|cites]

Criticism of Secrecy
Ann Devroy and David S. Broder, Quayle Pressured Agencies to Ease Rules on Business, Groups Say, The Washington Post, September 8, 1991 (A6): A major complaint of the study is that the council operates in secrecy, outside the normal regulatory process so citizens, consumer groups and pro-regulation forces cannot gauge what issues it is addressing, who is attempting to influence the process or to present its own case.

"The entire regulatory edifice [of government] is built on a foundation of openness and accountability to the public," the report notes, but the Quayle Council, because it operates in secret, "subverts" the process and "lets regulated businesses, unhappy over agency actions, turn to a lobbying office operated out of the White House."
Bob Woodward and David S. Broder, Quayle's Quest: Curb Rules, Leave 'No Fingerprints,' The Washington Post, January 9, 1992 (A1): Vice President Dan Quayle, a self-proclaimed "zealot when it comes to deregulation," has made his chairmanship of the President's Council on Competitiveness a command post for a war against government regulation of American business.

Democratic members of Congress, public interest groups, environmentalists and others have attacked the council for intervening in behalf of business to scuttle regulations that are the direct responsibility of other federal agencies. Seven congressional committees are investigating the council's activities. But the council's real role is much larger than even its critics imagine.

A six-month examination of the council's work by The Washington Post shows that Quayle and his small council staff of free-market activists have intervened in dozens of unpublicized controversies over important federal regulations, leaving what vice presidential aides call "no fingerprints" on the results of its interventions.
Bob Woodward and David S. Broder, Quayle's Quest: Curb Rules, Leave 'No Fingerprints,' The Washington Post, January 9, 1992 (A1): In the process, Quayle has infuriated critics such as Rep. Henry A. Waxman (D-Calif.), chairman of the House Energy and Commerce subcommittee on health and the environment, who has accused Quayle of setting up "an illegal shadow government." In an interview, Waxman compared what he called Quayle's "rogue operation" on the domestic front to the Reagan administration's secret maneuvers uncovered in the Iran-contra investigations. "The Council on Competitiveness has usurped power, holds secret meetings with industry groups, and violates administrative procedures on public hearings and public access to information on decision-making," Waxman said.

Waxman said he has long suspected that Quayle and the council staff are involved in many more behind-the-scenes activities, but congressional investigations have been able to bring only a few of the actions to light.

By attempting to "rewrite the laws through regulations" that are so technical "that the public cannot understand," Waxman said, "Quayle has set out to make himself the hero of the conservative forces in this country." Unless there is a public outcry, he said, "it's going to be difficult to stop him," because the issues of the council's authority and its interpretations of the law will take years to resolve in federal courts.
Bob Woodward and David S. Broder, Quayle's Quest: Curb Rules, Leave 'No Fingerprints,' The Washington Post, January 9, 1992 (A1): By putting Quayle and the Competitiveness Council into the game as a kind of Supreme Court of regulations, Bush has altered a well-established federal regulatory process, sanctioned by law, that allows all interested parties the opportunity to comment publicly and argue their positions on the record before regulations are issued. The change has lessened the rule-making power of federal agencies and tipped the outcome of these battles against those in Congress who push for strict regulation.
Bob Woodward and David S. Broder, Quayle's Quest: Curb Rules, Leave 'No Fingerprints,' The Washington Post, January 9, 1992 (A1): "We've had sometimes more visibility than I really want," Quayle said of the publicity surrounding the council. He said he would prefer that most of their interventions, like that on aircraft noise, leave no fingerprints.

But at the same time, Quayle and the president derive immense political benefit from business and big-donor Republican circles because of the council's deregulatory activities.

How many issues has the council been involved in? "Whew, quite a few," Quayle said. "I don't have a number, but this is a big government and people know our mandate is to hold down regulations and try to follow the deregulatory effort that the president established when he was vice president."

Other officials said that Quayle and the council staff limit the interventions to about 50 cases a year, tending to choose those with major economic impact. While Hubbard and McIntosh handle the detailed negotiations with the agencies, Quayle's chief of staff, William Kristol, keeps OMB Director Richard G. Darman, presidential domestic policy adviser Roger Porter and the White House chief of staff advised of council activities.
Wetlands
Bob Woodward and David S. Broder, Quayle's Quest: Curb Rules, Leave 'No Fingerprints,' The Washington Post, January 9, 1992 (A1): It is the use of informal, back channels outside public or congressional purview -- designed partly to thwart publicity and partly to hold down the temperature of disputes within the government -- that critics say denies the protections of open government. The approach is illustrated in the case of regulations governing development of the nation's wetlands.

During the 1988 presidential campaign, Bush focused the spotlight on wetlands, pledging "no net loss" of these ecologically fragile areas that foster wildlife and birds, help control floods and filter out contaminants before they enter streams.

Immediately after the election, but before Bush took office, technical specialists at the Environmental Protection Agency and three other agencies issued a manual more strictly defining wetlands in a way that expanded development restrictions on tens of millions of acres.

On his political swings around the country, Quayle said, he heard frequent complaints that the federal government was unnecessarily restricting the use of wetlands for real estate development and other business ventures. Ohio Gov. George Voinovich (R), for whom Quayle had campaigned extensively, "jumped all over me," Quayle recalled, "about one airport expansion project in northwest Ohio" that was being delayed by the wetlands restrictions.

Last May, an official said, Quayle told the council's executive director: "Hubbard, we need to do something about wetlands." EPA Administrator William K. Reilly protested against the intervention. Some White House officials argued that the hot-potato issue should be left to EPA and the other agencies, but Quayle received Bush's approval to become involved.

During the summer, negotiations hit innumerable snags. On the night before Reilly was to testify to the Senate, he, Quayle and Hubbard engaged in a round-robin series of telephone conversations trying to broker a deal. Each time Reilly thought he had Quayle's agreement, Hubbard called Reilly to say he had misunderstood. When their final agreement was presented at a White House senior staff meeting the next morning, Darman and Chief of Staff John H. Sununu erupted, and a last-minute call was made to Reilly -- in his car on the way to the hearing -- to tell him the deal was off.

After that near fiasco, Quayle convened the full Competitiveness Council on July 29. He began the session by expressing astonishment that vast areas of his home state of Indiana could have been classified as wetlands under the original definition in the manual, when he knew those areas were farmland.

According to those present, it quickly became clear that most of the agencies wanted to open more wetlands to development than Reilly did. But Quayle did not let the matter come to a vote, nor did he announce his own decision. "Didn't want to do it," he said in a recent interview. "Too many people spoke up and I felt that we needed a little cooling-off period to see if we could work this out."

Quayle aides suggested that the vice president was being protective of Reilly, knowing that a formal vote overruling the EPA chief's position would leak to the press and damage Reilly with environmental organizations and EPA professionals.

The opportunity for further negotiation came the next day, when Reilly came to Quayle's office to discuss matters related to the vice president's upcoming trip to Latin America. At the end of the visit, Quayle and Hubbard broached a compromise that had surfaced the previous day. The meeting ended without conclusion, but Quayle sent Hubbard after Reilly to press for an answer. Standing near his car in the driveway between the White House and the Old Executive Office Building, Reilly said he'd think about it overnight. The next day he phoned Hubbard to say yes.

The eventual announcement of the deal, which significantly narrowed the definition of wetlands in a way experts have said would halve the amount of protected acreage, served only to stoke the controversy. Final rules remain under review. Environmental groups have assailed the decision, but Quayle said Republican leaders in states such as Georgia and Louisiana have told him that "the best thing you've done is to stop EPA taking away people's property rights." Rep. Waxman has vowed that "at some point, Reilly is going to be called to face how far he is letting this go."

Quayle insisted that he and Reilly are not antagonists. "We have a very good understanding," Quayle said. "He comes at these issues from a very strong environmental point of view, [and] I argue there's some other things that need to be considered." Reilly, who reportedly blames Sununu for many of his problems, apparently harbors no grudge against Quayle. He has told associates that he does not think the council "compromised the integrity of the regulatory process. We are in a process of give and take."

But the critics are likely to press a procedural issue that troubles even some senior administration officials -- the question whether such informal sessions as the Reilly-Hubbard-Quayle meeting violate the rules of open advocacy that govern the regulatory process.

One senior regulatory official, who asked not to be named, said, "I believe in public notice and public comment, and it is not a good idea to have Vice President Quayle and his staff skewing that process."

This official and two senior officials in other agencies said that it was embarrassing that Quayle and his staff could have conversations with business people and others on regulatory matters and not have to report them on the public docket. Said one official of what is standard agency practice, "My people are under strict instructions not to talk to regulated parties, and if they meet someone at a cocktail party and have a discussion inadvertently they must write a memo and file it" with the public record.
Michael Weisskopf, EPA Defense of Wetlands Fuels New Threats; Taking an Aggressive Stand on Protection, Reilly Faces Formidable Rivals in the White House, The Washington Post, July 18, 1991 (A15): On his desk the day William K. Reilly took over the Environmental Protection Agency in 1989 was a thick plan to turn a picturesque stretch of a Colorado wilderness river into a dammed reservoir. The plan, already blessed by the EPA's regional administrator, thirsty Denver officialdom and the state's powerful Republican establishment, awaited only final approval by the incoming administrator.

Reilly was not prepared to rubber-stamp the plan. Within a few weeks, he announced that he was concerned about the dam's "very serious adverse environmental impacts" and began the process of rejecting the $ 1 billion project designed to assure the future water supply of Denver's burgeoning suburbs.

The unexpected veto of Two Forks Dam set the tone for what has become the most aggressive protection of wetlands in 20 years. Under Reilly, the EPA has intervened twice as often as it did in the previous administration to block the development of swampy terrain into housing complexes, oil fields and reservoirs.

But in his defense of wetlands, Reilly inadvertently fueled the greatest threat to wetlands protection since Congress moved to preserve the ecologically sensitive areas in 1972. A coalition of conservative politicians and industry, mobilized by concern about too much bureaucratic tinkering, is making inroads on wetlands safeguards, pressing to limit them and strip the EPA of authority to impose them.

A House bill, sponsored by Rep. James A. Hayes (D-La.), that seeks to scale back protections for "low-value" wetlands and remove the EPA's power to veto development plans has picked up 160 cosponsors.

But it is within the White House that the EPA chief faces his most formidable rivals. Ironically, President Bush drew attention to the issue with his 1988 campaign pledge of "no net loss" of wetlands and his appointment of Reilly, a career conservationist, to put it into practice.

A White House task force on wetlands since has become the battleground for determining what "no net loss" means. The group, which reports to Bush's council of top domestic policy officials, is headed by Teresa Gorman. A special assistant to the president, she is known for her staunch support of industry's concerns.

Gorman has led efforts to roll back wetlands protections. As Reilly was preparing to testify on wetlands at a Senate subcommittee last week, sources said Gorman instructed him, through an EPA aide, to avoid criticizing the Hayes measure.

Reilly ignored the instructions and attacked the bill for seeking to take away the EPA's authority to protect wetlands.

Gorman declined comment. Reilly was said to be traveling in the West and unavailable for comment.

A second point of controversy is a manual drafted by scientists in 1989 to define the kinds of wetlands worthy of being closed to oil drillers, timber companies and developers seeking to exploit them.

As currently written, the manual confers equal protection on millions of acres of wetlands, whether they are coastal marshes rich in vegetation and bird life or prairie "potholes" that hold water for just a few days a year.

Even Reilly believes the definition is too broad to enforce, and he has disappointed some environmentalists by calling for modifications. For example, the manual confers protection on land saturated for seven consecutive days within 18 inches of the surface. He wants to relax the criteria to 15 days of surface saturation.

But because the EPA shares jurisdiction over wetlands with the Interior and Agriculture departments and the Army Corps of Engineers, any proposed revision must be approved by all, as well as the Office of Management and Budget (OMB). Only then can it be formally proposed and submitted for public comment.

Unresolved for months, the issue appeared headed last week for the presidential Council on Competitiveness. Chaired by Vice President Quayle, the council was set up to stop undue regulatory burdens on industry. Technically, it is supposed to referee interagency disputes and hear appeals by agencies unhappy when OMB vetoes proposed regulations.

Because he felt he had a good working relationship with Quayle, Reilly sought to cut through the red tape. On the night before his Senate testimony last Wednesday, administrative sources said, Reilly appealed to the vice president by telephone to accept a compromise in the wetlands manual that would extend protections to areas inundated 10 to 20 consecutive days per year. He suggested that the precise number of days be debated during the public comment period.

By midnight, Quayle consented and gave Reilly permission to present the revised manual to the subcommittee as a final administration package, according to the sources.

But on the way to the Senate hearing, the sources said, Reilly received a call on his car phone from Allan B. Hubbard, a top Quayle aide who is executive director of the council. The EPA administrator was directed not to release the revised manual, despite the earlier understanding with Quayle, sources said.

Another vice presidential aide called the subcommittee's Republican counsel and left the same message to be passed on to Reilly, according to a Senate source.

Hubbard declined to comment.

An administration source suggested that Reilly and Quayle had not reached final agreement. But he could not explain why Quayle's aides scurried to stop Reilly from releasing the manual.

Reilly, known for his independence, released the document anyway. He made sure, however, to attribute it to the EPA, not the administration. He told the senators he hoped to get White House concurrence soon and publish it in the Federal Register.

Reilly was reported to have incurred White House Chief of Staff John H. Sununu's wrath while gaining leverage for wetlands protection. By unveiling the EPA position, he set an environmental base line from which his White House rivals retreat at the risk of appearing too soft on industry, according to officials.

Nevertheless, Quayle has decided to put the issue before the council, which includes such conservative officials as Sununu, the OMB director and chairman of the Council of Economic Advisers.
Airport Noise and Capacity Act
Bob Woodward and David S. Broder, Quayle's Quest: Curb Rules, Leave 'No Fingerprints,' The Washington Post, January 9, 1992 (A1): The [1990 Airport Noise and Capacity Act] requires U.S. airlines to replace noisy aircraft with new, quieter jets by the year 2000. The proposed FAA regulation spread the timetable for getting rid of the noisy planes at a steady pace over the next 10 years, with 25 percent of them to be phased out by 1994, 50 percent by 1996, and 75 percent by 1998.

The airlines had argued to the FAA and OMB, without success, that the rules should emphasize "phasing in," not "phasing out," thereby giving them credit for the quieter planes they had already purchased and allowing them to retain noisy jets in the fleet for years longer...

Meanwhile, Hubbard convened a dozen meetings with officials of the FAA, Transportation Department and OMB, seeking an agreement. Hubbard's threat of direct intervention by Quayle and the council ultimately convinced the FAA that a relaxation of the timetable would still comply with the law, and the industry proposal was accepted in its entirety.

"We do not have a monopoly on good ideas," said Kenneth P. Quinn, the FAA's chief counsel. "We welcomed the input of the Competitiveness Council. We learned something . . . and the final rule was a reasonable balancing of environmental benefits versus the economic costs."

Quinn said he had close to 100 conversations or meetings with Skinner over the year they were considering the issue, and although the Competitiveness Council, OMB and the Council of Economic Advisers were heavily involved, "the secretary's prerogative to decide the issue was legitimately preserved" and Skinner "himself made the decision."

It was Skinner who announced the decision, on Sept. 24. It attracted heavy news coverage, for it involved the economic plans of 30 airlines with 2,000 planes and a delay in relieving the eardrums of 3 million people who live near noisy airport flight paths.

Patrick J. Russell, an attorney for the National Airport Watch Group, which represents 300 local anti-noise groups in 75 cities, complained that citizens had little input in a ruling that directly affected them. A USA Today editorial said Skinner's message to those who live near airports was: "Things will be better in 10 years. Meanwhile stuff it. Uncle Sam knows what's best."

News stories barely mentioned the role played by the Competitiveness Council -- and that was just as Quayle wanted it. His staff had discussed the possibility of publicizing his part in the decision and decided not to, because they recognized it was a "political loser," as one of Quayle's aides said. "Millions of people hate airplane noise, and there was no benefit to be derived from being associated with the decision that would mean more noise longer," the aide said.
Privilege
Editorial, Quayle's secret rule-buster, The Boston Globe, December 2, 1991: [T]he Council on Competitiveness is meddling in the rule-making process while refusing to reveal deliberations on the grounds that it is protected by "executive privilege," under which confidential communications between the president and his aides are not subject to congressional or public scrutiny.

By intruding on the functions of the EPA and other agencies, the council has lost whatever claim it had on executive privilege. A federal court has already ruled that the council's predecessor, which was far less controversial, has no right to withhold its records from the public, but this case is being appealed and will have little impact on Quayle's council.

A bill proposed by Sen. John Glenn of Ohio would provide a useful check on the council's power. Glenn wants the council to open its records to public inspection. He would require the president to publish a list of all the rules under review and mandate that the council explain to the EPA and other rule-making agencies why their regulations are being revised.
Dana Priest, Competitiveness Council Under Scrutiny; Critics Charge Panel Lets Industry Exert Back-Door Influence on Implementing Laws, The Washington Post, November 26, 1991 (A19): In its bouts with the White House, Congress appears to have won a short, opening round in its efforts to unlock the mystery of Vice President Quayle's Council on Competitiveness.

At about 10 p.m. Thursday, after days of negotiations, the Food and Drug Administration turned over a 20-inch stack of documents to the House subcommittee on human resources and intergovernmental relations. The FDA had previously claimed some of the documents were part of the White House deliberative process and not subject to disclosure.

The documents, which were obtained only after the committee issued a subpoena for them, pertained to the council's role in recent changes to the FDA's drug-approval process.

A preliminary review of the documents, said subcommittee Chairman Ted Weiss (D-N.Y.), shows what he has suspected: that the council had a hand in the regulatory process in ways it should not have. "It's wrong and improper," Weiss said...

What particularily irks members of Congress is that they know little about how the council operates, who the council meets with and what the council suggests or forces agencies to do to regulations they are writing.

Recent reports that the council's executive director, Allan B. Hubbard, is half-owner of a chemical processing company that could, at some point, be affected by rules his council helps write increased congressional determination.

Hubbard has sought and received from Quayle, the council's chairman, a waiver of the conflict-of-interest laws. The waiver was also reviewed by the Office of Government Ethics.

Last week, the House subcommittee on health and the environment requested that Quayle appear before it to answer questions about council involvement in writing regulations to implement amendments to the Clean Air Act and, in particular, the way certain rules may affect one of Hubbard's businesses, World Wide Chemicals, which uses chemicals to manufacture car polishes, waxes and cleaners.

The request was an empty one, as the White House has a policy of allowing only administration employees subject to Senate confirmation to appear before Capitol Hill committees, a category Quayle does not fall into.

Also last week the House Government Operations Committee requested that Hubbard provide it with detailed information about the workings of the council and his participation in those deliberations.

Over in the Senate, the Governmental Affairs Committee voted out a bill that would compel federal departments and agencies to explain how the administration -- through the council or the Office of Management and Budget -- had influenced the way certain regulations were written...

The council contends that it is part of the White House and its communications are part of the executive's decision-making process and not subject to congressional oversight or other requests for disclosure.

While council officials maintain their privacy in these matters, they are clearly pleased with some of the attention the council has been getting recently. One council staff member referred approvingly to an editorial in yesterday's Wall Street Journal that began:

"It wasn't long ago that Vice President Dan Quayle was said to be Washington's village idiot. All of a sudden he's become its scheming Rasputin. This can only mean he's begun to accomplish something."

The council openly took credit for helping the FDA craft the new drug-approval policy, but members of the Weiss subcommittee and other council critics believe that the council, with the weight of the White House behind it, may have forced the FDA to accept positions it otherwise would not have taken.

Critics are particularly concerned about provisions in the new approval process that will hand over evaluation of certain drugs to outside contractors.

The full-throated embrace of stealth and deception was of course accompanied by unethical self-dealing. As the council's record leaked out and the extent of Hubbard's conflicts of interest became increasingly clear, Hubbard attempted to deny his ethical transgressions. First, he claimed that Quayle had waived his conflicts, allowing him to rule on issues germane to his financial interests. The waiver didn't withstand scrutiny. Second, he established a "blind trust," which was actually nothing of the sort, as he retained ownership of the company he founded. Eventually, he was forced to relocate to "political staff," after which his power seemed to wane considerably.

The conflicts that were discovered were clear and involved considerable sums of money. One involved weakening the nascent Clean Air Act while owning $18,000 in stock in a utility stock holding company, PSI Holdings. Another, which took place after the creation of the "blind trust," involved easing E.P.A. rules on bank loans to owners of polluted sites while owning $18,000 to $65,000 worth of stock in three Indiana banks. The biggest, of course, is Mr. Hubbard own E&A Industries, which held a 50 percent interest in World Wide Chemicals Inc. The council eased EPA Clean Air Act regulations that may have affected World Wide Chemicals. E&A Industries paid Hubbard $780,000 in dividends in 1991.

Even when there were not blatant, personal conflicts of interest, the Competitiveness Council was an prodigious source of graft. Companies would covertly and unilaterally petition the council for relief from proposed egulations. They weakened reglations on "housing accessibility for the disabled, clothing makers' right to work at home, disclosure requirements on pensions, protection of underground water from landfill runoff, reporting requirements for child-care facilities located in religious institutions, and fees for real estate settlements." Occasionally the council's decisions would exceed even what industry was asking for (air quality over the Grand Canyon). As Quayle and Hubbard jetted around the country, they met with corporate donors to make sure they knew the return they were getting on their investments. [|cite]

PSI Holdings
Pennies From Heaven, Newsweek, December 16, 1991: Last week documents released by Rep. Henry Waxman showed that Allan Hubbard, the council's executive director, presided over a meeting that rejected regulations affecting a utility, PSI Holdings Inc., in which he holds between $ 15,000 and $ 50,000 in stock.

PSI releases more than 550,000 tons of acid-rain-making sulfur dioxide (SO[2]) every year. EPA had proposed last summer that utilities that did not continuously monitor SO[2] emissions be required to fill in the gaps with the highest levels recorded over the previous 30 days. On Aug. 14 PSI wrote to EPA that the utility was "greatly impacted" by that scheme. Two months later the council told EPA that utilities should be permitted to disregard the 10 percent of hours with the highest values. In PSI's case, that would lowball emissions by 2,000 pounds per hour. Says Waxman, "A stockholder of one of the three most polluting electric utilities is dictating EPA's acid-rain rules."
Banks
Philip J. Hilts, Quayle Aide Faces New Conflict Charge, The New York Times, June 18, 1992: After putting his stock holdings in trust to avoid conflict-of-interest accusations, a top aide to Vice President Dan Quayle is again under investigation for possible violation of criminal conflict-of-interest laws.

The subject of the inquiry is Allan B. Hubbard, an Indiana investor who is deputy chief of staff to the Vice President and the chief organizer of Mr. Quayle's campaign travel.

Representative John Conyers Jr., Democrat of Michigan and chairman of the House Government Operations Committee, which is investigating the matter, says Mr. Hubbard may have violated the Federal conflict of interest law by helping to renegotiate a regulation criticized by the banking industry at the same time he owned stocks in three banks.

Mr. Hubbard owns $18,000 to $65,000 worth of stock in three Indiana banks, financial disclosure reports say. According to documents of the Environmental Protection Agency and the White House Council on Competitiveness, he negotiated last year with the E.P.A. to ease rules on bank loans to owners of polluted sites.

Under E.P.A. regulations, banks that make such loans have to clean up the polluted sites if the owners default on their loans and the banks take over the property. Mr. Hubbard played a major role in persuading the E.P.A. and Treasury Departments to change the regulations to allow some banks to lend money to the landowners without sharing liability for a clean-up, documents indicate.

This is not the first time Mr. Hubbard has been accused of Federal conflict-of-interest violations. In December, Mr. Hubbard announced he would set up a blind trust for his stock holdings after Congressional leaders asserted that he might have violated conflict-of-interest laws by working on pollution regulations that affect companies in which he owned stock.
Blind Trust
Michael Weisskopf, Amid Conflict Questions, White House Official to Put Holdings in Blind Trust, The Washington Post, December 11, 1991 (A23):
The White House's top regulatory review official, whose ownership of regulated industries or their stock has raised conflict-of-interest questions, announced plans yesterday to place his holdings in a blind trust.

In a move he said was designed to "make absolutely certain that no one could reasonably question my ethics," Allan B. Hubbard, executive director of the President's Council on Competitiveness, also promised to donate 1,000 shares of stock in a regulated electric power company to three Indianapolis charities.

Recent news reports of Hubbard's role in supervising clean air regulations affecting industries in which he has a financial interest -- he owns half of a chemical processing firm as well as the utility stock -- have heightened criticism of the council. Set up to protect big business from overzealous regulators, it has been criticized for operating in secrecy and providing special interests an opportunity to recover in the rule-making process what they lost in the legislative round.

"I trust that these measures will put all these issues to rest and will allow us to return to the discussion and debate of the important policy matters about which we both care so much," he said in a two-page letter to Rep. Henry A. Waxman (D-Calif.).

But Waxman, who released the letter at a hearing he called to look into the conflict question, was not satisfied. He said that as long as Hubbard knows the contents of a blind trust, he should recuse himself from regulatory decisions that could influence his holdings.

The Office of Government Ethics sanctions two types of blind trusts. Officials can hand over their assets to an unrelated trustee -- normally a financial institution -- and observe conflict-of-interest laws until the relevant assets are sold and replaced with new, undisclosed ones.

When officials hold liquid and diversified securities, they can transfer the portfolio to a trustee granted authority to buy and sell without notifying them. Officials do not even see their tax returns and are free to operate without concern of conflicts.

A spokesman for Hubbard said he hired a private lawyer to discuss alternative possibilities with the government ethics office. "Most people will find the arrangement more than adequate," he said.

It is not clear how Hubbard will handle his interest in World Wide Chemicals Inc., which he co-founded in Indianapolis 14 years ago to blend chemicals into car cleaners. He owns half of the company, which paid him $ 780,000 in dividends last year, according to his financial disclosure statement.

World Wide Chemicals emits small amounts of the kind of pollution that the new Clean Air Act regulations -- currently under review by the council -- are designed to control.

The company is not a liquid security that can be placed in the most thorough blind trust, and if it were put into the more limited version, Hubbard would be legally bound to observe conflict-of-interest laws until it was sold and replaced.
Bob Woodward and David S. Broder, Quayle's Quest: Curb Rules, Leave 'No Fingerprints,' The Washington Post, January 9, 1992 (A1): Last month, Waxman and others raised conflict-of-interest allegations against Hubbard, who responded by pledging to put his substantial wealth in a blind trust. Waxman, however, is not satisified and says that Quayle himself should have a blind trust. Quayle has nearly $ 400,000 of stock in Central Newspapers Inc., which is affected by trash recycling regulations the council has handled.

"I don't think they [Quayle and Hubbard] are motivated by traditional greed," Waxman said. "But the attitude is inconsistent with the standards set by Bush for his administration, which is supposed to be there will be no appearance of a conflict."

Quayle rejected that view. "We are trying to hash out differences within the administration," he said, "and this is a rather normal White House function. . . . Congress doesn't like the White House meddling, period. They feel that EPA, for example, should be more beholden to the Congress than to the executive branch. Well, that's just the normal tension that you have between the legislative and the executive branch. We're just diametrically opposed. The White House should be concerned and involved on a rather detailed basis on what kind of regulations are out there. We get blamed for them."

Quayle promised that the deregulation crusade would go forward, and held two long meetings with his staff before Christmas to draw up a list of regulations and issues the council plans to target in 1992.
Waiver
Michael Weisskopf, Amid Conflict Questions, White House Official to Put Holdings in Blind Trust, The Washington Post, December 11, 1991 (A23): Last May, he sought and received a waiver from Vice President Quayle -- chairman of the council -- allowing him to participate in matters that do not substantially and directly affect his holdings.

But his involvement in clean air regulations affecting the general chemical industry sparked criticism because of World Wide Chemicals. Although the firm is not a large enough polluter to qualify for a pollution permit today, its potential eligibility in a few years raised questions about Hubbard's participation.

The rule on permits -- proposed in April and pending final review -- deviated significantly from the congressional intent, allowing polluters to increase their plant emissions without the need for a public review.

Hubbard also was criticized for chairing an October meeting where a key acid rain regulation governing utilities was significantly weakened. He owns 1,000 shares of PSI Energy Inc., an Indiana utility that is a major emitter of acid rain substances and that lobbied against the regulation that was watered down.

The stock, valued today at $ 18,000, will be donated to the Indianapolis Children's Museum, United Way and United Christmas Fund, Hubbard said in his letter.

Previously, Hubbard cited the Quayle waiver to defend himself against conflict allegations. On Monday, the White House counsel's office sent a letter to Waxman concluding that the council administrator had "complied with all applicable conflict of interest standards."

But the counsel's judgment was almost immediately disputed. At yesterday's hearing, Waxman lined up law professors who specialize in ethics issues and concluded that the waiver violated statutory requirements because it was too sweeping and was not limited to matters in which Hubbard held "insubstantial" interests.

Criticism continued even after Hubbard announced plans for a blind trust. Rep. John Conyers Jr. (D-Mich.), whose House Government Operations Committee is leading one of four congressional investigations of the council, said the decision "does not erase the possible taint of past activities."
Worldwide Chemical
Michael Kranish, Quayle aide's firm is linked to pollution; Official works on emissions rules, The Boston Globe, November 20, 1991: Vice President Dan Quayle's deputy chief of staff, who is deeply involved in the revision of federal clean air regulations, is co-owner of a company that an Indianapolis official said violates local antipollution laws. The official also said the company could benefit from the revisions that the aide is pursuing.

Quayle granted the aide, Allan Hubbard, a waiver of federal conflict-of-interest laws, allowing him to work on issues that might generally benefit his substantial corporate holdings, according to documents reviewed by the Globe.

Hubbard is Quayle's deputy chief of staff and executive director of the Council on Competitiveness, which the vice president heads.

In that role he oversees the council's review of federal regulations that affect business interests. Critics say the council's proposed changes would weaken dozens of air pollution regulations.

On Nov. 12, Hubbard signed a memorandum asking the Justice Department about the legality of a Quayle proposal to allow a company to increase pollution if local authorities fail to object in one week.

Hubbard owns 50 percent of World Wide Chemical Inc., an Indianapolis firm that deals with products used in automobile finishing. Indiana environmental officials told The Globe that the company emits toxic pollutants without the required local permit. Hubbard's company, they said, could benefit from some of the regulation changes proposed by Quayle's council.
Michael Kranish, Gore urges Quayle aide to quit post, The Boston Globe, November 22, 1991: Sen. Albert Gore Jr. called yesterday on Vice President Dan Quayle's deputy chief of staff to resign, saying the vice president's aide has a clear conflict of interest in revising air pollution regulations that might affect his own company.

The Tennessee Democrat also said Quayle should never have waived conflict-of-interest rules for the aide, Allan Hubbard. A Quayle spokesman has said the vice president and Hubbard acted properly...

"Vice President Quayle made a critical error not only by turning his back on a flagrant conflict of interest, but also by condoning that conflict of interest with a waiver," Gore said in a speech prepared for delivery on the Senate floor. He said "Allan Hubbard should not be allowed to continue as executive director."
Christopher Brachli, Conflict of Interest at the Top, Journal of Commerce, December 26, 1991: The next example is furnished by the malapropically named Council on Competitiveness. It is headed by Vice President Dan Quayle. Its goal is to make sure that governmental regulations do not compete with industry's ability to make money.

With Mr. Quayle in command, it's no competition - at least as far as the regulations are concerned.

Among other things, the council has blocked a ban on burning lead-acid batteries and delayed implementation of a rule protecting workers from the hazards of formaldehyde.

It also has asked the EPA to make more than 100 changes in proposed regulations to the 1990 Clean Air Act - changes which EPA officials say undercut the law. The charge is usually led by Allan B. Hubbard, the council's executive director.

Mr. Hubbard owns a 50 percent interest - worth more than $ 1 million - in World Wide Chemicals Inc., an Indiana corporation that mixes chemicals to make car wax and other automotive products. According to the consumer advocacy group Congress Watch, the council, led by Mr. Hubbard, succeeded in weakening the EPA's permit proposal for emission of pollutants.

That may benefit companies like World Wide Chemicals. According to the Indianapolis Pollution Control Board, last year World Wide released between 17,000 and 19,000 pounds of toxic chemicals into the atmosphere.

Mr. Hubbard also owns stock in PSI Resources, a holding company owning stock in 15 utility companies in Indiana. The EPA lists PSI as among the largest utility polluters in the country. PSI lobbied the EPA extensively to obtain a relaxation of a proposed pollution rule on acid rain.

Although the EPA refused to change the rule, the council chose a version of the rule that permits industry to ignore its worst days of pollution for purposes of measuring smokestack emissions.

Federal law prohibits government officials from participating "personally and substantially" in decisions in which they have a financial interest. Mr. Hubbard is not affected by the law because Mr. Quayle issued a waiver to Mr. Hubbard on June 17, l991. The waiver permits him to take part in matters affecting companies in which he has a financial interest as long as his interest is not substantial.

Last year Mr. Quayle helped kill an EPA regulation that would have required municipal waste incinerators to recycle at least 24 percent of the trash destined for burning. Among groups opposing the regulation was the American Newspaper Publishers Association, which includes four newspapers in which Mr. Quayle owns significant amounts of stock.

In his case there is no conflict of interest because, as vice president, Mr. Quayle is exempt from certain conflict of interest laws.

All of the foregoing was good preparation for a long report in the Wall Street Journal on Dec. 6 concerning the business activities of George W. Bush, one of the president's sons. While finding no evidence of wrongdoing, the story describes in detail how fortune has smiled on Harken Energy Corp. Since George the Younger joined its board of directors.

Among other things, one of its shareholders began receiving invitations to meetings at the White House after George the Younger joined the board. The company itself received the much-coveted right to engage in offshore drilling in Bahrain even though it had no experience drilling in water or overseas.

Presidential spokesman Marlin Fitzwater said "There is no conflict of interest, or even the appearance of conflict."

When confronted with complaints about the Competitiveness Council, he responded that the issue was politically motivated. "This is pathetic. This is just harassment because it works for them politically."

What he forgot to say is it also works for Messrs. Woods, Hubbard, Quayle and maybe even George the Younger. You may decide whom you want conflicts of interest to benefit. You can let the president know next November.
Pro-Industry Bias
Ann Devroy and David S. Broder, Quayle Pressured Agencies to Ease Rules on Business, Groups Say, The Washington Post, September 8, 1991 (A6): Vice President Quayle has used the Council on Competitiveness that he chairs to "stall or block health and safety rules, advance deregulation and pressure federal agencies to pull back from strong enforcement," a study by two watchdog groups has concluded.

The study, by OMB Watch and Ralph Nader's Public Citizen's Congress Watch, examined a series of regulatory case studies, from writing regulations for the new Clean Air Act to regulations defining protected wetlands. They said the case studies illustrate a pattern of the Quayle Council interceding in disputes among government agencies to push for rules and standards sought by business and industry and in one case -- that of the regulation of emissions over the Grand Canyon -- attempting to go beyond even what the affected industry had agreed was acceptable.
Ann Devroy and David S. Broder, Quayle Pressured Agencies to Ease Rules on Business, Groups Say, The Washington Post, September 8, 1991 (A6): The report also charges that Quayle and his aides, none of whom have any scientific expertise in the areas in which they are interceding, have invited companies unhappy with proposed regulations to use the council to seek redress, rather than work through the normal process, giving business and industry an extraordinarily high-powered advocate that consumer and citizen groups do not have.
Bob Woodward and David S. Broder, Quayle's Quest: Curb Rules, Leave 'No Fingerprints,' The Washington Post, January 9, 1992 (A1): They have changed or tried to change regulations on federal rules relating to commercial aircraft noise, bank liability on property loans, housing accessibility for the disabled, clothing makers' right to work at home, disclosure requirements on pensions, protection of underground water from landfill runoff, reporting requirements for child-care facilities located in religious institutions, and fees for real estate settlements.
Bob Woodward and David S. Broder, Quayle's Quest: Curb Rules, Leave 'No Fingerprints,' The Washington Post, January 9, 1992 (A1): In almost every city he visits as a campaigner, Quayle holds closed-door round tables with business people who have made sizable contributions to the local or national GOP. Hubbard, who also has the title of deputy vice presidential chief of staff, often travels with Quayle and sits in on these sessions.

I'm not shocked that Bush would appoint a guy like Hubbard.

 

Recent Posts

There Is No Crisis: Protecting the Integrity of Social Security

Articles

Archives

Powered by BloggerWeblog Commenting and Trackback by HaloScan.com