This article originally provided by The Lexington Herald-Leader

October 20, 2006

When McConnell's pull fails, his Labor secretary wife fills in

By John Cheves
HERALD-LEADER STAFF WRITER

WASHINGTON - Millionaire coal magnate Bob Murray knew the name to drop in September 2002, when Mine Safety Health Administration inspectors confronted him about safety problems at his mines: Sen. Mitch McConnell.

Murray, a large man with a fierce temper, is a huge donor to Republican senators. McConnell, R-Ky., rose through the ranks by raising money for those senators. And McConnell is married to Labor Secretary Elaine Chao, whose agency oversees MSHA.

Shouting at a table full of MSHA officials at their district office in Morgantown, W.Va., Murray said: "Mitch McConnell calls me one of the five finest men in America, and the last I checked, he was sleeping with your boss," according to notes of the meeting. "They," Murray added, pointing at two MSHA men, "are gone."

Murray, in a recent interview, denied that he referred to McConnell "sleeping with" Chao.

But nobody disputes that district manager Tim Thompson, at one end of Murray's jabbing finger and the man whose notes recorded the meeting, was transferred to another region, away from Murray's mines. He appealed the transfer for three years until he grudgingly took retirement in January. Labor Department officials refuse to discuss his transfer.

"The ironic part is, I'm a Republican," said Thompson, now a private mine-safety consultant. "But I don't think you should bring up politics at a meeting like that, involving safety."

When it comes to workplace-related issues such as mine safety, the McConnell-Chao marriage presents an intriguing target for industry donors. At the Labor Department, Chao has taken what some reports say is a relaxed attitude toward the regulation of coal mines and an approach that labor unions perceive as hostile.

Sometimes Chao achieves what her husband cannot in the Senate, such as a wage freeze her department instituted on certain farmworkers.

Chao attends her husband's fund-raisers, chats with his donors and seeds her agency with his former aides. Chief among them is Deputy Labor Secretary Steven Law, whose last job was helping McConnell tap donors -- Bob Murray included -- at the National Republican Senatorial Committee. They collected an impressive $187 million in four years there.

Chao declined to comment for this story. (Law, who did comment, said politics do not influence the Labor Department.)

McConnell recently said he neither asks Chao to favor his donors nor advises her on Labor Department activities. "She doesn't need any direction from me," he said. "In fact, I think that's a little bit insulting." It's hardly surprising they both push the Republican Party agenda in their jobs, he said.

"I'm a Republican, and I generally support what the Bush administration is trying to do," McConnell said. "She takes her orders from the White House."

Ergonomics rule

Some longtime McConnell donors found their lobbying efforts more effective once Chao took over the Labor Department.

For example, the Food Marketing Institute lobbied the Senate and the Labor Department after President Bush took office in 2001 to kill the mandatory ergonomics rules that President Clinton had intended to protect workers from repetitive-stress injuries. The institute says it represents 26,000 grocery stores.

At the urging of the institute and other business groups, in 2001 McConnell and the GOP Senate narrowly approved a resolution declaring that Clinton's safety rules "shall have no force or effect."

But it was Chao, after the food institute's officials approached her, who sealed the deal by replacing Clinton's safety rules with "voluntary guidelines," the institute told its members in a newsletter.

"The proposed voluntary guidelines will give our member companies helpful suggestions," the group's chief executive, Tim Hammonds, said in a statement thanking Chao for "the new spirit of cooperation."

The institute, which had contributed at least $13,000 to McConnell in the 1990s, upped its donations, giving him nearly $13,000 more during Chao's first two years as labor secretary. Officials of the institute declined to comment.

"There's definitely an overlap in what they're doing, and McConnell makes no bones about it," said Bruce Goldstein, director of Farmworker Justice, a Washington non-profit that advocates for laborers.

Asked about the 2002 incident in which Murray angrily threw his name at mine inspectors, McConnell said he knew nothing about it and hasn't spoken to Murray since before then. He denied calling Murray one of America's five finest men. "After what he apparently said about me, he wouldn't make my list," McConnell said.

Murray, chief executive of Murray Energy, acknowledged in a recent interview that he loudly complained about MSHA manager Thompson at the meeting. Thompson harassed his mines for no reason and even shut down operations in one for hours, he said.

He said it's possible he mentioned his friend McConnell. His company's political-action committee has given about $360,000 in campaign donations since 2000, nearly all to Republicans, including McConnell. Murray personally has given about $100,000.

"I have no idea why I would have brought up Sen. McConnell, but I can tell you I have a tremendous respect for what he does," Murray said. Regarding Thompson's transfer, Murray added: "I said he should be removed. But they didn't do it because I said so."

After the Murray incident was reported in various publications, Thompson said he was angry that his name had been released, and scared that McConnell would be mad at him. So, he said, he sent a polite letter this year to McConnell to make it clear that he didn't blame the senator or his wife for his problems. He has never been given a reason for his transfer, he said.

Corporate origins

Bush picked Chao as labor secretary in 2001 after his original choice, Linda Chavez, withdrew because of questions about an illegal immigrant who had lived in her home. Chao had proved her Republican loyalty as a "Bush Pioneer," having raised more than $100,000 for the president's campaign.

Born in Taiwan and raised in New York, her father the wealthy founder of a shipping company, the 53-year-old Chao was educated at Mount Holyoke College and Harvard Business School. She worked in international banking and as a midlevel Republican federal appointee before taking over the United Way of America, which had been rocked by financial scandal. Chao is credited with restoring its reputation.

When Bush chose her, Chao was making more than $200,000 a year as a "fellow" at the Heritage Foundation, a conservative, corporate-funded think tank in Washington. While she was there, Heritage scholar D. Mark Wilson issued a report titled How to Close Down the Department of Labor, in which he blasted Labor's "excessive burdens on businesses." Chao hired Wilson as deputy assistant secretary in charge of workplace standards.

She also made hundreds of thousand of dollars in speaking fees and by serving on the boards of directors for 13 corporations, several of which donated to McConnell and lobbied the Senate for favorable laws and federal contracts. Nearly all her board memberships began after they married in 1993.

Chao is staunchly conservative. Speaking at a Washington event in May, she said, "Often, people come into public service with a zeal to take immediate action. But, sometimes it's not what you do but what you refrain from doing that is important."

Few industries were happier to see Chao bring that philosophy to the Labor Department than mining, which has given more than $400,000 to McConnell's Senate campaigns, according to the Center for Responsive Politics.

In early 2001, industry magazine Coal Age listed the various mining executives invited to shape the agency's agenda and wrote that they were "benefitting from high-level access to policymakers in the new administration."

At the Mine Safety and Health Administration, Chao named Utah coal operator David Lauriski as director, assisted by former McConnell aide Andrew Rajec. (Lauriski resigned in 2004, citing family concerns, after the Labor Department's inspector general questioned no-bid MSHA contracts that went to firms connected to him.)

His deputies for policy and operations, John Caylor and John Correll, had been executives at Cyprus Amax Minerals Co. of Englewood, Colo. The company's PAC gave $17,000 to McConnell and $15,000 to the National Republican Senatorial Committee while McConnell and Law, now Chao's deputy, ran it.

"They stacked MSHA with executives who came straight from the coal and mining companies," said Tom Kiley, a Democratic aide to the House Education and Workforce Committee. "Sure, it's good to have some expertise, but there was no effort to balance that with people from the workers' side. It's totally the fox guarding the henhouse over there."

Close to coal

The first battle over the Labor Department's new practices concerned its investigation of the largest-ever environmental disaster east of the Mississippi River.

At a subsidiary of Massey Energy Co., a McConnell donor, a massive coal slurry spill was unleashed on Eastern Kentucky in October 2000. Nobody died, but the waterways ran black with several hundred million gallons of coal waste. MSHA investigated for evidence of negligence. Jack Spadaro, the MSHA engineer in charge, said Massey had been warned that its slurry retention pond was unstable.

After Chao became secretary, Spadaro said, she put on the brakes. She told reporters "it's time to call off the MSHA food fight" over the spill.

"They came to us and said, 'Boys, it's time to wrap things up,'" Spadaro said recently. "And we were nowhere near finished."

Spadaro said he argued with Lauriski over the contents of the final report, which he alleged "whitewashed" Massey's misdeeds. Spadaro and his MSHA bosses continued to butt heads for months, and he left the agency under protest.

In April 2002, MSHA levied $110,000 in fines on Massey, a sum Spadaro said was much smaller than appropriate. A Labor Department administrative law judge later reduced that to $5,600 and ruled that the MSHA failed to show enough negligence by the company.

In September 2002, Massey's PAC gave $100,000 to the National Republican Senatorial Committee.

The Labor Department and its critics disagree on the agency's recent impact on mine safety.

A January 2006 report by the Democratic staff of the House Education and Workforce Committee said that, under Chao, MSHA cut its coal-enforcement staff and weakened its oversight.

Labor Department officials dispute those findings and say that, between 2001 and 2005, citations to mine operators rose.

One undisputed fact is that by Oct. 12, the number of U.S. mining deaths for 2006 had climbed to 62 -- up 41 percent from this time in 2005, the worst fatality rate in the last five years.

Some MSHA officials talk of being pressured to go soft even when they uncover serious problems.

In April, MSHA inspector Danny Woods told the Pittsburgh Post-Gazette that colleagues wanted to shut down part of a Massey coal mine in West Virginia in January because spilled coal and dust had accumulated along a belt line, raising the risk of a fire. The request was denied. Woods said inspectors were told "to back off and let them run coal, that there was too much demand for coal."

Days later, on Jan. 19, a fire in that part of the mine killed two miners. MSHA spokeswoman Amy Louviere recently said MSHA is investigating Woods' allegation, so she cannot discuss it.

McConnell, a longtime advocate of tax breaks for mine owners, has had relatively little to say about miners, although he represents thousands. The United Mine Workers of America said they count a number of Republican and Democratic senators as champions of miners, willing to tour mines and promote safety legislation. But not McConnell, the union said.

"He's not done anything to help us with mine safety," said Bill Banig, the union's legislative director. "It does seem odd, given the state that he represents."

Law, the deputy labor secretary, said Chao's Labor Department has markedly improved enforcement on mine safety since 2001.

Mirroring McConnell

Sometimes Chao picks up the ball and runs with it at the Labor Department when McConnell fails to reach a similar goal in the Senate.

For example, McConnell filed legislation for three years, starting in 1998, to curb the mandatory annual raise in wages of legal immigrant farmworkers under the government's H2A program. By 2001, the wage in Kentucky was $6.60 an hour, which struck some agricultural businesses as too high. (Agribusinesses have given McConnell more than $1 million for his campaigns -- out of $21 million from all donors over 22 years, according to the Center for Responsive Politics.) But the bills kept failing.

In 2001, Chao ordered an indefinite delay in the release of an annual Labor Department wage report that triggered the farmworker raise. It was an insider move, not noticed by most Americans, but praised by McConnell's Republican congressional colleagues and business groups in letters obtained from Chao's office.

Farmworker Justice sued Chao on behalf of immigrant workers, and in 2002, U.S. District Judge Gladys Kessler ordered her to resume publishing the wage report in a timely fashion.

In 2002, McConnell filed an amendment to a corporate ethics bill that would force unions -- whom McConnell criticizes for supporting Democrats over Republicans -- to file far more detailed public reports on their spending. His amendment drew protest from unions, and four Republicans joined with Democrats to defeat it.

The next year, Chao announced stricter rules on unions' expense disclosures through the Labor Department's mandatory reporting system. Unions now must itemize every expense of $5,000 or more. The unions protested, but her order was upheld.

Richard Berman, a corporate lobbyist whose clients include McConnell donors, seized on the newly released financial data to launch a Web site, UnionFacts.com. The Web site -- like McConnell -- criticizes unions for giving more money to Democrats than Republicans. It also alleges criminal activities and urges union members to quit.

Berman's organization, The Center for Union Facts, found an ideological ally in Chao's Labor Department.

Berman and Chao both send aides to attend First Friday Labor Reform Working Group meetings on Capitol Hill, where Republican congressional staff and lobbyists brief each other on union policy. Labor Department e-mails obtained in June show Berman's staff and Chao's aides sharing union criticism, organizing lunches and promoting Berman's Web site within the department.

Berman declined to talk about his relationship to Chao, a spokeswoman said.

The watchdog group that obtained the e-mails, Citizens for Responsibility and Ethics in Washington, said McConnell, a conservative Republican senator, can choose to side with corporations. But the labor secretary should not be so "cozy" with businesses, said Melanie Sloan, CREW president.

"The Labor Department is supposed to be there for the American worker," Sloan said.

$375,000 -- Mining industry donations to McConnell's Senate campaigns

$200,000 -- Chinese-American donations to McConnell from out of state

$8,000 -- First donation to McConnell from the Chao family

Reach John Cheves at (202) 383-6036 or at jcheves@herald-leader.com.