September 5, 1996

Honorable Nancy Johnson
Chairwoman
House Committee on Standards of Official Conduct
HT-2, The Capitol
U. S. House of Representatives
Washington, DC 20515

RE: Ethics Complaint Against Representative Bud Shuster and Call for Investigation into Possible Violations of Criminal Law and House Rules

This letter constitutes a formal ethics complaint against House Transportation & Infrastructure Committee Chairman Elmer Greinert "Bud" Shuster (R-PA) and a call for an outside counsel investigation into whether Representative Shuster violated criminal prohibitions against the acceptance of illegal gratuities, as well as House Rules. These charges arise from the complex relationship between Representative Shuster and lobbyist Ann Eppard, and Rep. Shuster's interventions with federal agencies on behalf of a business partner of his sons.

We are writing pursuant to House Rule 10, which authorizes the House Committee on Standards of Official Conduct to investigate "any alleged violation, by a member, officer or employee of the House, of the Code of Official Conduct or of any law, rule, regulation or standard of conduct applicable to the conduct of such member, officer, or employee in the performance of his duties or the discharge of his responsibilities."

The Congressional Accountability Project sent a letter to U. S. Attorney General Janet Reno on February 28, 1996 urging the Department of Justice to investigate many of these charges, as well as the appearance that Ann Eppard may have violated the one-year post-employment prohibition against personal staff lobbying their former employer.⁽¹⁾

We believe the Ethics Committee must respond to the enormous public appearance problem arising from the tangled web of legislative, political, financial, and personal ties between Representative Shuster and lobbyist Ann Eppard. This unseemly relationship between Representative Shuster and Eppard has become a serious threat to the integrity of the legislative process. Public confidence in the Congress and the legislative process is low, and is vulnerable to appearances that particular lobbyists are able to obtain special legislative favors for their clients which are unavailable to most citizens.

A: The Complex Web of Legislative, Political, Financial, and Personal Ties Between Lobbyist Ann Eppard and Representative Bud Shuster

According to the Journal of Commerce, "Ann Eppard brought in more than $600,000 in revenue from transportation clients in her first year as a lobbyist."⁽²⁾ She has represented a long list of transportation-related clients before Chairman Shuster's committee, including Amtrak, Conrail, the Outdoor Advertisers Association of America, Frito-Lay Inc., Federal Express Corp., the American Road and Transportation Builders, Fastship Atlantic Inc., and the Ocean Common Carrier Coalition.

Articles in the Journal of Commerce and Roll Call have described how lobbyist Eppard and House Transportation & Infrastructure Committee Chairman Shuster have developed a complex interconnecting web of legislative, political, financial, and personal ties. Lobbyist Ann Eppard plays many important roles in Shuster's life, including:

• Washington fundraiser and assistant treasurer for Shuster's Congressional re-election campaign. According to the Journal of Commerce, Eppard "helped raise $655,000 for Rep. Shuster in 1995."⁽³⁾ Last year, Eppard stated that "I certainly am working hard to make sure that Bud Shuster has enough of a war chest so that anyone thinks seriously about challenging him."⁽⁴⁾ According to Timothy Burger of Roll Call, "Shuster's 1995 campaign disbursements included numerous payments to employees of Eppard's lobbying firm attributed to 'fund raising activity' -- suggesting Shuster's campaign fundraising is being handled largely out of a lobbying office whose main source of income is representing clients before Shuster."⁽⁵⁾Roll Call reported that "Rep. Bud Shuster...acknowledged in a statement Thursday that his campaign is based in the home office of a lobbyist whose main business is representing clients before his committee."⁽⁶⁾ Eppard is paid $3,000 per month by Shuster's campaign committee. Eppard signed in the treasurer's signature box for the Shuster for Congress Committee's January 31, 1996 Federal Election Commission report of receipts and disbursements.

 
• "Top political aide"⁽⁷⁾ and political consultant to Shuster's Congressional campaign responsible for district affairs. A Journal of Commerce article reported that

• Press aide for Rep. Shuster's Congressional office. A Roll Call editorial on May 2, 1996 noted that, instead of responding directly to press calls to regarding official favors to businessman Maurice Lawruk, Rep. Shuster's Congressional "office referred calls by other news organizations to Eppard. So now a lobbyist whose business depends on her ability to influence the outcome of actions in Shuster's committee is the official spokesperson defending him."⁽⁹⁾

 
• Chairman of the Bud Shuster Portrait Committee. According to the Journal of Commerce, Eppard "organized a private fund-raiser to finance a portrait of the chairman, which has been ensconced in the committee's hearing room. Transportation-related associations and companies were asked to contribute primary funding."⁽¹⁰⁾ According to Roll Call, "sources said [that the portrait] cost more than $40,000."⁽¹¹⁾

 
• Campaign aide and fundraiser for Shuster's son, Bob Shuster, who ran for Congress in the 1996 Pennsylvania Republican primaries. According to Roll Call, "With Eppard's help, Bob Shuster has already raised more than $100,000 for his fledgling campaign, much of it from the same transportation interests with business before his father's committee."⁽¹²⁾

 
• "Liaison for special interests wanting Mr. Shuster to appear at Washington events,"⁽¹³⁾ according to the Journal of Commerce.

 
• Provider of housing. According to the Wall Street Journal, Shuster "has stayed at the lobbyist's home many times, he confirmed yesterday."⁽¹⁴⁾Roll Call reported that "Multiple Congressional and transportation industry sources told Roll Call that Shuster has been regularly staying at Eppard's when he is in Washington....Eppard runs her flourishing lobbying company...out of the same Alexandria home where Shuster stays."⁽¹⁵⁾

 
• De facto official staff person. According to the Journal of Commerce, "Ms. Eppard also provided staff-like services to Rep. Shuster, acting as his driver to and from his office on Capitol Hill, a role she has played for many years."⁽¹⁶

• Shuster implicitly recommended Eppard to potential lobbying clients. Roll Call reported that:
Shuster, say other transportation lobbyists, has made it clear in industry circles how much he continues to value Eppard's counsel -- and that, they insist, has helped Eppard's business.

At one dinner that Eppard helped organize after the 1994 elections, for example, Shuster told representatives from the air transportation industry a "lot of nice things about Ann. About how good she is and how well she knows the Hill," according to a source with knowledge of the event....⁽¹⁷⁾

B: Call for Investigation of Whether Shuster Violated House Gift Rules

Furthermore, the House Ethics Manual states that:

no Member, officer, or employee may accept more than 30 days of personal hospitality in a calendar year without a prior written waiver from the Committee.⁽¹⁹⁾

The new gift rule, effective January 1, 1996, prevents House members from receiving many types of gifts from lobbyists. Even though Ms. Eppard may qualify for the "personal friendship" exemption to the gift rule, there is still a prohibition against Members accepting:

a gift the value of which exceeds $250 on the basis of personal friendship exemption...unless the Committee on Standards of Official Conduct issues a written determination that such exception applies.⁽²¹⁾

The Committee has a long established policy of waiving the limits of the gift rule "in the case of individuals who have a long-standing personal or social relationship with the Member or employee, where it is clear that it is those relationships that are the motivating factor of the gifts, rather than the fact of the individual's office or position in Congress." If your relationship meets these criteria, the Committee would determine that you may accept gifts exceeding $250 in value from Ms. Eppard, under the personal friendship exception to the gift rule. The rule requires the donee to seek the Committee's written approval prior to accepting gifts exceeding $250.00.⁽²²⁾

Finally, on the issue of gifts, the House Code of Official Conduct states that:

A Member, officer, or employee of the House of Representatives shall receive no compensation nor shall he permit any compensation to accrue to his beneficial interest from any source, the receipt of which would occur by virtue of influence improperly exerted from his position in Congress.⁽²³⁾

C: Some of Eppard's Clientele Have Received Significant Legislative Benefits From Chairman Shuster and the House Transportation & Infrastructure Committee

• Frito-Lay Inc. According to the Journal of Commerce, Frito-Lay
hired Ms. Eppard to assist in marshaling through Congress a law directing the secretary of transportation to set up a regulatory relief program for midweight delivery trucks....

The proposal, introduced in the House Transportation and Infrastructure Committee by Rep. Bill Emerson, R-Mo., who also wanted to win relief for farm vehicles, became controversial when trucking safety proponents and DOT officials raised questions about its workability. The language was later narrowed to make it a pilot program that was ultimately enacted.⁽²⁴⁾

Frustrated after a five-year effort to soften safety rules for medium- sized trucks, such industry giants as Frito-Lay and Federal Express Corp. turned to friends in the new Republican Congress for help.

And a quiet lobbying campaign aimed at the House Transportation Committee yielded in a few months what years of regulatory struggles had not: a waiver that could exempt service and delivery trucks from more than a dozen rules on the age and physical condition of drivers, on the number of hours they may drive and on paperwork for truck safety and maintenance.⁽²⁵⁾

Mary Staples, a Frito-Lay lobbyist, told the Wall Street Journal about Ann Eppard Associates' lobbying performance on behalf of Frito-Lay: "We were satisfied; they did a great job."⁽²⁶⁾

• Federal Express Corp. According to the Journal of Commerce, Federal Express
was able to get a subcommittee hearing on U.S.-Japan bilateral aviation relations just as U.S. negotiators were dealing with their counterparts. A dispute had developed between FedEx and Japanese officials over FedEx's plan to open cargo service between Tokyo and its new hub in the Philippines. The hearing in which lawmakers hinted at retaliatory action was little noticed in the United States, but was broadcast by television news channels in Japan.⁽²⁸⁾

Federal Express paid Ann Eppard Associates at least $18,333 in fees during 1995.⁽³⁰⁾

• Outdoor Advertisers Association of America. According to the Journal of Commerce, they were
successful in winning a change to federal policy governing the placement of billboards along routes designated partially as scenic byways. Rep. Shuster dug in his heels during negotiations with the Senate on highway legislation to protect the language, which through a series of regulatory layers will have the effect of allowing more billboards than before.⁽³¹⁾

the billboard industry has figured out that the best way to get legislation advancing billboards through Congress and state legislatures is to hide it. So this provision that would allow new billboards on scenic roads was hidden deep inside an 88-page bill designating the National Highway System.

The bill must be passed by late September to allocate billions of dollars in federal highway money. What better way to slide a billboard industry "gift" past legislators and Congress-watchers than to attach it to a bill that must be passed quickly and is so long that people aren't likely to read it?

Behind this latest attempt is the illustrious Rep. Bud Shuster, R-Pa., chairman of the House Transportation and Infrastructure Committee...⁽³²⁾

• Amtrak. According to the Journal of Commerce,
Rep. Shuster worked hard to save Amtrak from a shut-off of federal funding sought by some within the House Republican Caucus. He delivered a reform-and-privatization bill to the House floor that gave Amtrak much of what it wanted to achieve a badly needed financial restructuring.⁽³⁴⁾

When the public works section was presented, Bud Shuster (Pa.), chairman of the Transportation and Infrastructure Committee, countered Kasich's salesmanship with a threat. The proposal to phase out Amtrak and freeze mass transit projects was "a transportation disaster," Shuster said.⁽³⁵⁾

Amtrak paid Ann Eppard Associates $100,000 in fees during 1995.⁽³⁷⁾

D: Call for Investigation into Whether Shuster and Eppard Violated Criminal Laws Prohibiting the Solicitation and Acceptance of Illegal Gratuities

House Rule 10 authorizes the Ethics Committee to "investigate...any alleged violation, by a Member, officer, or employee of the House, of the Code of Official Conduct or of any law, rule, regulation, or other standard of conduct applicable to the conduct of such Member..." We request that the Ethics Committee conduct a preliminary inquiry into whether illegal gratuities were exchanged, and, if necessary, to forward the relevant findings to the Justice Department.

18 U.S.C. 201 states that it is a crime for a federal official to "directly or indirectly, corruptly" receive or solicit "anything of value personally or for any other person or entity, in return for...being influenced in the performance of any official act." Criminal law on illegal gratuities, 18 U.S.C. 201, prohibits a federal official from directly or indirectly soliciting or receiving anything of value other than "as provided by law...for or because of any official act performed or to be performed."

The remarkable symbiotic network that Eppard and Shuster operated on each other's behalf raises the clear likelihood -- and provides substantial circumstantial evidence to support the conclusion -- that section 201 may have been triggered. We strongly encourage the Ethics Committee to undertake a vigorous investigation to determine whether such violations did occur.

E: Rep. Shuster Intervened With Two Federal Agencies On Behalf of Maurice Lawruk, Who is a Business Partner of Rep. Shuster's Sons

The cardinal principle governing Senators' conduct in this area is that a Senator and a Senator's office should make decisions about whether to intervene with executive branch or independent agencies on behalf of an individual without regard to whether the individual has contributed, or promised to contribute, to the Senator's campaign or other causes in which he or she has a financial, political, or personal interest...

Because Senators occupy a position of public trust, every Senator must always endeavor to avoid the appearance that the Senator, the Senate, or the governmental process may be influenced by campaign contributions or other benefits provided by those with significant legislative or governmental interests.⁽³⁸⁾

Rep. Bud Shuster (R-Pa) helped a family friend win a $3 million contract with the Department of Housing and Urban Development, then twice intervened with the executive branch in an effort to save the real estate developer $350,000 in labor costs.

Even as Shuster's official actions aided Altoona businessman Maurice Lawruk...the multimillionaire in 1990 became a financial backer of a new car dealership. His partners in that enterprise: Shuster's sons.⁽³⁹⁾

On August 31, 1990, Lawruk signed on the dotted line as "guarantor" of a lease for the newly christened Shuster Chrysler, risking his own money for the five-year, $260,000 lease....

William Shuster became the president of the dealership. His brother Robert...is the vice president.

Lawruk is listed on official documents as secretary and treasurer of the dealership.

Less than two months later, Rep. Shuster urged then-Housing and Urban Development Secretary Jack Kemp to exempt Lawruk's construction at the Penn-Alto Hotel from the Davis-Bacon Act, which requires the payment of "prevailing wages." According to Roll Call, Shuster wrote to Kemp on October 12, 1990:

"I am writing to you today on behalf of Maurice A. Lawruk Builders, Inc...it is my belief that the Davis-Bacon Act does not apply to the Penn Alto Hotel project...I would urge you to review this matter as quickly as possible [and] would appreciate your giving all possible consideration to this request...."

Rep. Shuster wrote a similar letter to then-Secretary of Labor Lynn Martin on March 21, 1991. Handwritten at the bottom of that letter from Rep. Shuster to Secretary Martin were the words "please help."

Finally, the Ethics Committee should determine what benefits from the Shuster Chrysler dealership have inured to Rep. Shuster. Rep. Shuster may well be a co-beneficiary of the Shuster Chrysler dealership. If so, then any interventions made by Rep. Shuster on behalf of Lawruk must be seen in this light.

F: Conclusion

The Ethics Committee should immediately appoint an outside counsel who can disentangle the interconnected mutual network of favors, benefits, and interests enjoyed by Representative Bud Shuster and Ann Eppard to determine whether criminal laws and House Rules were violated. We believe that the strong circumstantial evidence indicating that such violations of law may have occurred clearly warrants such an investigation. Anything less than a vigorous investigation pursued by an outside counsel will further strain the credibility of the Ethics Committee, and further erode the public's trust in the House ethics process.

Sincerely,
 

Gary Ruskin
Director

This is to certify that I have today, by hand delivery, provided an exact copy of this complaint to the Respondent in this matter, Representative E. G. "Bud" Shuster, at the following address:

Representative Elmer Greinert "Bud" Shuster
2188 Rayburn House Office Building
U.S. House of Representatives
Washington, DC 20515
 

Gary Ruskin
Complainant

1. See Attachment #1, which includes the February 28, 1996 Congressional Accountability Project letter to Attorney General Janet Reno. William L. Roberts, "Congressional Watchdog Group Calls for Investigation of Shuster, Eppard." Journal of Commerce, February 28, 1996. Timothy J. Burger, "Justice Dept. Reviews Shuster Charges." Roll Call, February 29, 1996.

2. William L. Roberts, "Lobbyist's '95 Revenue Could Top $1 Million." Journal of Commerce, February 8, 1996. See Attachment #2.

3. Journal of Commerce, February 8, 1996.

4. William L. Roberts, "Aide's Ties Raise Ethical Questions." Journal of Commerce, July 31, 1995. See Attachment #3.

5. See Attachment #4, which includes Timothy J. Burger, "Transportation Chair Lodges With Ex-Aide Who Makes Six Figures Lobbying His Panel." Roll Call, February 8, 1996. "Investigate Shuster." Editorial, Roll Call, February 12, 1996. Karen Tumulty, "The Ties That Bind." Time, February 26, 1996. Jill Abramson, "Emergence of Single-Member Lobbying Raises Fresh Concerns in Post-Packwood Washington." Wall Street Journal, September 20, 1995. "Dynamic Duo." Editorial, New York Times, March 16, 1996. William L. Roberts, "Lawmaker, Lobbyist Ties Under Scrutiny." Journal of Commerce, February 12, 1996. "Shuster & Ethics." Editorial, Roll Call, February 22, 1996.

6. Timothy J. Burger, "Two Shusters Are Running for Congress, Both Aided by Fundraising Help of Lobbyist Eppard." Roll Call, February 12, 1996. See Attachment #5.

7. Roll Call, February 8, 1996.

8. Journal of Commerce, July 31, 1995.

9. "Shuster, Inc." Editorial, Roll Call, May 2, 1996. See Attachment #6.

10. Journal of Commerce, February 8, 1996.

11. Roll Call, February 8, 1996.

12. Roll Call, February 8, 1996. See also David Bauman, "Shuster Target of Unflattering Publicity." Gannett News Service, February 8, 1996.

13. Journal of Commerce, July 31, 1995.

14. Phil Kuntz, "Pennsylvania's Rep. Shuster Stayed at Home of Ex-Aide, Now a Lobbyist." Wall Street Journal, February 9, 1996. See Attachment #7.

15. Roll Call, February 8, 1996.

16. Journal of Commerce, February 8, 1996.

17. Roll Call, February 8, 1996.

18. House Rule 43, Clause 4.

19. House Ethics Manual at 29.

20. House Rule 10, Clause 4(e)(1)(D).

21. House Rule 52, sec. 1(e)

22. From "Questions asked by Congressman Bud Shuster," which is attached to Correspondence from House Committee on Standards of Official Conduct Chairman Nancy L. Johnson and Ranking Democratic Member Jim McDermott to Rep. Bud Shuster, June 13, 1996. The interior quote is House Bipartisan Task Force on Ethics, Report on H.R. 3660, 101st Cong.,1st Sess., 135 Cong. Rec. H9255 (daily ed. Nov. 21, 1989.). Attachment #8 also includes William Roberts, "House GOP Pushes Ethics Clearance for Shuster." Journal of Commerce, June 13, 1996. Damon Chappie and Juliet Eilperin, "Ethics Spars Over Plan to Clear Rep. Shuster." Roll Call, June 13, 1996. "D'Amato & Shuster." Editorial, Roll Call, June 13, 1996. Juliet Eilperin, "Unusual Ethics Letter Suggests He Needed Waivers." Roll Call, June 17, 1996. William Roberts, "Ethics Hands Shuster Neutral Letter." Journal of Commerce, June 18, 1996.

23. House Rule 13, clause 3.

24. See Attachment #9 which includes William L. Roberts, "Eppard's Clients Win Some, Lose Some." Journal of Commerce, February 8, 1996. William L. Roberts, "Frito Hires Eppard to Lobby on Truck Rules." Journal of Commerce, November 9, 1995.

25. Jim Drinkard, "Firms Win Concession on Safety for Trucks." The Commercial Appeal, September 30, 1995. See Attachment #10.

26. Wall Street Journal, February 9, 1996.

27. "Eppard's Clients." Journal of Commerce, February 8, 1996.

28. Journal of Commerce, February 8, 1996. See also Attachment #11, which includes William Roberts, "Republican Strategy for FedEx Falls Flat." Journal of Commerce, May 29, 1996.

29. "Airlines Support Hard Line in Dispute with Japan as New Round of Talks Begins." Bureau of National Affairs, Daily Report for Executives, July 21, 1995. See Attachment #12.

30. Journal of Commerce, February 8, 1996.

31. Journal of Commerce, February 8, 1996. See also Attachment #13 which includes William L. Roberts, "Billboard Rift Blots Landscape of Highway Spending Talks." Journal of Commerce, November 8, 1995.

32. Diane Steinle, "Washington Insider Aids Outdoor Advertisers." St. Petersburg Times, September 13, 1995. See Attachment #14.

33. Journal of Commerce, February 8, 1996.

34. Journal of Commerce, February 8, 1996.

35. David Maraniss and Michael Weisskopf, "Coaxing GOP Factions to Toe the Budget Line." Washington Post, May 26, 1995. See Attachment #15.

36. "House Approved Amtrak Reform Bill That Would Change Labor Provisions." Bureau of National Affairs, Inc. Daily Labor Report, December 1, 1995. See Attachment #16.

37. Journal of Commerce, February 8, 1996.

38. House Ethics Manual at 250-251 quoting the Senate Select Committee on Ethics, Investigation of Senator Alan Cranston, S. Rep. No. 102-223, 102d Cong., 1st Sess. 11-12 (1991).

39. Timothy J. Burger, "Shuster Intervened for Sons' Business Partner." Roll Call, April 29, 1996. See Attachment #17.