Pai Not Seen as Required to Recuse Himself on Securus/ICS, but Some Cite Higher Standard

FCC Chairman Ajit Pai appears free to consider issues affecting Securus and inmate calling services in general, despite allegations he has a conflict of interest stemming from his past legal work for the ICS provider, ethics specialists and former commissioners told us. They noted Pai is more than five years removed from his Securus representation, and government recusal requirements last only one to two years. But two government watchdog advocates suggested Pai hold himself to a higher standard to avoid any appearance of a conflict.

The Human Rights Defense Center on Aug. 9 asked Pai to recuse himself from Securus and ICS matters. HRDC cited Pai's acknowledgment that Securus was a client while he was at Jenner & Block in 2011-12, and further alleged he "never stopped representing" the provider's interests after arriving at the agency in May 2012. The inmate family advocacy group cited his dissents as a commissioner from ICS rate regulations and as chairman in not defending in court key parts of a 2015 order, which was largely reversed. HRDC's request was posted in several dockets, including 17-126 on the ICS provider's planned sale from Abry Partners to Platinum Equity (see 1708100020).

Pai’s participation in ICS rulemakings and Securus deals "were and are in full compliance with both the letter and spirit of government ethics rules," said an FCC spokesman. Section 2635.502 of executive branch conduct standards generally requires officials to recuse themselves from party-specific matters affecting parties they worked for or represented "within the last year." Pai was also covered by a two-year "revolving door ban" in then-President Barack Obama's 2009 executive order preventing appointees from participating "in any particular matter involving specific parties that is directly and substantially related" to their former employers or clients, "including regulations and contracts" (an EO of President Donald Trump has a similar two-year ban).

Pai apparently didn't participate in FCC review of Securus' previous sale to Abry, which two bureaus cleared in an April 2013 order in docket 13-79. He did participate in ICS rulemakings, including one culminating in an order capping interstate ICS rates adopted 2-1 in August 2013 over his dissent (without Pai's vote, there would have been no quorum). Securus CEO Richard Smith subsequently called Pai's dissent "brilliant" and "phenomenal" and said the company would use it as a blueprint in court (see 1309300045). It later won a partial stay. "Under the provisions of both ethics pledges and the general government-wide appearance regulation, Chairman Pai was free to participate in all rulemakings and similar matters of general applicability, including the 2013 ICS rulemaking," said the FCC spokesman. Communications Daily has a pending request for related documents under the Freedom of Information Act.

Participation OK

Pai's involvement in Securus and ICS issues appears "protected" by recusal sunsets of one and two years in the executive branch and presidential requirements, said Thomas Cooke, professor at Georgetown University's McDonough's School of Business, who studies ethics. He called the allegation that Pai continues to represent Securus based on his FCC decisions "a serious stretch." He said HRDC could be putting pressure on Pai to demonstrate he's being neutral.

"Based only on the facts in your publication, I do not find a requirement that Mr. Pai disqualify himself from involvement in any matter affecting Securus under the ethics laws and regulations for Federal employees," emailed John Szabo, George Washington University adjunct law professor for legal ethics, who responded to our query and previous article. He cited the apparent absence of a "direct relationship" between Pai and Securus for five years. Even in the first two years covered by recusal requirements, there was a difference between "particular matters" involving Securus and "matters of general applicability" regulating various entities, he said. Szabo and Cooke called recusal decisions personal judgments.

Pai generally was allowed to take actions affecting the industry as a whole under the Obama EO, Public Citizen lobbyist Craig Holman agreed. "But any actions -- including specific rulemaking -- that would have disproportionately affected his former employers or clients within the previous two years would have been a violation," he said. "Of course, the two-year recusal period would no longer be in effect."

Ethics laws don't always require recusal, as officials "rarely have a conflict" in wide-ranging proceedings, said Scott Amey, Project on Government Oversight general counsel. But he said officials can and should hold themselves to a higher standard: "If there is the possibility of bias" they "should do the right thing by recusing themselves from official duties that involve" a former client. Recusal is best to "avoid even an appearance of a conflict of interest" so taxpayers know government decisions are based on the public, not private, interest, he said. "I wholeheartedly agree," said Holman. "Pai should hold himself to a higher standard."

Invoking Ralph Nader

"To paraphrase Ralph Nader, the problem with American politics isn’t what’s illegal, it’s what is legal," responded HRDC Executive Director Paul Wright. "Pai’s relationship with Securus certainly has the appearance of impropriety. We also don’t know what the extent of his relationship is with Securus since he really isn’t saying." He noted Smith and others sent Pai a "personal and informal note" July 27 according to Securus' characterization explaining a controversy about state approvals (see 1708140040). "The biggest red flag ... is after all these years on the FCC and conceding that the ICS industry is a case of market failure, Pai has done everything he can to undermine and destroy any and all attempts at protecting consumers," Wright emailed.

Pai "did a limited amount of work" for Securus and a few other clients while at Jenner, according to his 2011 statement in a Senate Commerce Committee hearing record. Pai "looks forward to continuing to work with Congress, state and local governments, and providers to achieve just and reasonable prison phone rates for inmates and their families,” said the FCC spokesman Wednesday.

Ex-Republican FCC Commissioner Kathleen Abernathy doesn't see why Pai should recuse himself based on what's known. "I could understand it if this had happened two or three years ago, but we're talking about 2012," she said. "If Pai recused himself, anyone who comes to the commission with any experience whatsoever would have to recuse themselves. ... If you go too far down this path, you would prevent good, qualified people from participating in higher levels of government." Another former commissioner said, "I don't think [Pai has] any kind of conflict."

Nicholas Johnson, a Democratic commissioner 1966-73, said the issue depends on how close Pai was to Securus, and any ongoing personal relationships he's had with company officials. "The whole revolving door thing is a major problem," he said. But "most human behavior is not regulated by law; it's regulated by norms." Another former commissioner said recusal is a "gut" decision that depends on circumstances. If an official represented a company for 15 years and became "synonymous" with the company, that would be more serious, the ex-commissioner said.

Mark Fowler, GOP FCC chairman 1981-87, defended Pai's character. "He's well-known as a man of great integrity. I would be surprised if he violated any rule," Fowler said. The idea that Pai's ICS decisions show he's still representing Securus is absurd, he suggested: the decisions are "a product of his ideology or philosophy." He said Pai is working to ensure the FCC takes actions based on policy factors and the public interest, not politics. He cited as "soft corruption" the FCC's 2015 decision to impose net neutrality regulation under Communications Act Title II after Obama called on the agency to use its strongest legal authority. Responded Democrat Tom Wheeler, FCC chief at that time: "I'm disappointed in Mark. He knows better."

ICS Notebook

The California Public Utilities Commission adopted an order approving the sale of Securus to SCRS Acquisition (Platinum Equity), a CPUC representative confirmed Thursday. There was no opposition to the application for indirect transfer of control, said a draft order released Tuesday (see 1708230021).

Wright Petitioners criticized Securus and Platinum Equity attempts to respond at the FCC to various controversies raised regarding their planned transaction. "These justifications are woefully inadequate in light of the clear evidence of statutory and rule violations, and lack of candor exhibited in this proceeding," said the inmate family advocates in a filing posted Thursday in docket 17-126. "Prior to finding that its approval of the Transaction is in the public interest, convenience and necessity, the Commission must address Securus’ violation of Section 64.6080 and Section 64.6090 of the Commission’s rules, Securus’ inaccurate and misleading statements involving its audio and video calling rates, its finances, its role in seeking relief from state regulatory agencies, and the false and misleading information provided by Securus and Deutsche Bank in the 'personal and informal note' delivered to Chairman Pai on July 27."

Wright Petitioners asked a court to allow them to amend a petition for rehearing en banc a three-judge panel ruling reversing key parts of the FCC's 2015 ICS rate order. The amended petition should be allowed after the panel recently modified its ruling, said the group's motion (in Pacer) Thursday to the U.S. Court of Appeals for the D.C. Circuit in Global Tel*Link v. FCC, No. 15-1461.