State Regulators Face Scrutiny After Nebraska Absolves State Official Consulting for Telcos

Pursley, an unelected Nebraska official, consults for Alaska Communications Systems, Puerto Rico Telephone and Virgin Island Telephone, in a part-time role with Parrish, Blessing & Associates (PB&A), said the Monday opinion by AG Douglas Peterson: That’s not a conflict because the PSC doesn’t regulate those companies, the AG said. Windstream is a PB&A client, but Pursley doesn’t do work for it, and the official’s work doesn’t give him a business or financial interest in a carrier regulated by the commission, the AG said. On a February 2016 statement of financial interests we obtained Wednesday, Pursley also listed Great Plains Communications as a business that -- in the past -- paid him more than $1,000.

Nebraska PSC Commissioner Crystal Rhoades agrees "it looks bad even if it is legal and my preference would be that Mr. Pursley not engage in this outside employment," the Democrat emailed. Pursley isn’t violating state law, wrote Nebraska Accountability and Disclosure Commission (NADC) Executive Director Frank Daley in a March 17 letter to Pursley. The letter, which Daley forwarded to us Wednesday, responded to a March 6 "potential conflict of interest" statement by Pursley. There's "nothing" in the Nebraska Political Accountability and Disclosure Act (NPADA) "that would prohibit you from engaging in outside activity with Parrish Blessing," Daley wrote: Windstream's being a PB&A client "does not, by itself, create a conflict of interest as to matters coming before the PSC involving Windstream."

Pursley legally doesn't "have a business association with Parrish Blessing," even though he was a director and now works part time, Daley wrote. "Mere employment, by itself, does not rise to the level of a business association. The NPADA does not address past business associations." Pursley may continue to consult, but Nebraska law prohibits him from using state resources for the outside work, and from doing the consulting work on state time, Daley wrote.

The consulting work should still raise concerns for the public, said Common Cause Nebraska Issues Chairman Jack Gould in an interview. “You've got to be awfully careful, and this is an agency that should be Spic and Span.” The three companies cited in the opinion may not be regulated in Nebraska, but they might have ties to companies that are, Gould said. “Part of the problem in Nebraska is our weak conflict of interest laws.” Filing a conflict-of-interest statement protected Pursley, he said.

Pursley’s consulting work presents at least “the appearance of a conflict of interest, which responsible public servants should seek to avoid, and may present an affirmative conflict that could prevent him from performing his official work objectively,” emailed Sunlight Foundation Executive Director John Wonderlich. “There is also clearly a trend among state level utilities regulators, where leading officials fail to avoid conflicts of interest with outside employment or income.”

Gould blamed lack of public scrutiny. The public doesn’t pay much attention to small state agencies like the Nebraska PSC, meaning fewer checks on their officials, he said.

“NARUC’s members voluntarily voted to adopt a general ethics code in 1977,” a spokeswoman emailed. “The association always includes a session on ethics at the annual meeting and in our regular new commissioner trainings. By and large, we find that our members uphold the ethical standards required of their states.”

More Questions

The Nebraska PSC may have another ethics issue, said Gould: campaign contributions to commissioners.

Nebraska elects its commissioners and some refer to the PSC as the agency “where retired politicians go,” Gould said. Common Cause raised conflict-of-interest concerns in 2007 about elected Nebraska commissioners receiving thousands of dollars in campaign funds annually from regulated entities, he said. One commissioner flagged then, Rod Johnson, remains a PSC member and is “still taking big bucks” from companies and their executives, Gould said. Johnson, a Republican state legislator from 1983 to 1992, is a 25-year veteran and was re-elected in November. In the 2016 election cycle, he got $15,478 in campaign contributions, with much of the money coming from telecom companies and their executives, said a January disclosure report.

Hamilton Telecommunications executives including CEO John Nelson and Chairman Phil Nelson gave about $1,250 combined to Johnson’s 2016 re-election campaign. Great Plains Communications, CEO Todd Foje, and former CEO Michael Jensen contributed more than $1,100 combined. Diller Telephone President Randy Sandman gave $449 and Stanton Telecom Vice president Robert Paden gave $350. Johnson got nearly $500 each from American Broadband and Glenwood Telephone, about $320 from CenturyLink and $250 from Windstream. Multiple contributors are directors of the Nebraska Telecommunications Association. Johnson didn’t comment.

"Most of us despise raising money, but know we must do it in order to run a campaign," Rhoades emailed. "PSC districts contain roughly 375,000 voters and span several counties and it takes money to reach that many voters." Rhoades would prefer publicly funded and capped campaigns at every level, she said. "Accepting money from corporations is not illegal and is fully disclosed," she said. "It's unfair to criticize elected officials in one agency for accepting campaign contributions when this is done at every level of elected office and the rules of the game are set by legislature, regulatory authorities, and even the supreme court, not by those trying to obtain elected office."

Iowa, Arizona

In Iowa, a March report indicated possible conflict of interest by Iowa Utilities Board Chairwoman Geri Huser may have violated terms of her employment by unlawfully maintaining a law practice while working for the state. The board denied The Associated Press report, saying Huser properly disclosed personal and financial business interests before accepting nomination as chair (see 1703310036). Iowa Gov. Terry Branstad (R) appointed Huser to the board for a six-year term in 2015, and for two-year terms as chair in that year and again this year. The controversy delayed Huser’s confirmation for two more years as chair in the Iowa Senate, but senators last month voted 44-4 to confirm her for the second term. Subsequent AP reports in May claimed Huser violated state law by using state email for legal work and claiming sick leave Feb. 6 to attend a client’s court hearing. The IUB hired an intern who previously worked as an assistant at Huser’s law firm, another AP report said.

The allegedly improper state emails were unintentional, an IUB spokesman emailed Wednesday. Huser was using her private computer and new software that defaulted to her state email account without her knowing, resulting in six messages sent from the wrong account, he said. Huser took sick leave Feb. 6 “because she was sick,” not “to attend the court hearing,” the spokesman said. On the internship, the board “followed the process laid out by the State of Iowa for agencies utilizing paid internships,” he said. Huser wasn’t involved in the interview process and the IUB’s general counsel made the internship offer for the position, he said.

The Arizona Corporation Commission meanwhile is mulling a code of ethics after the investigation and subsequent resignation of ex-Chairwoman Susan Bitter Smith (see 1703240033). AG Mark Brnovich (R) asked the state Supreme Court to remove the elected commissioner due to conflict of interest, alleging Bitter Smith is a registered lobbyist and executive for Southwest Cable Communications Association. In March, the commission sought comments on the ethics code. The agency didn’t comment now.