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House clears Shuler on ethics rap

After months of high-profile scrutiny, U.S. Rep. Heath Shuler, D-Waynesville, has been cleared in an ethics inquiry that examined whether the congressman used his influence to benefit one of his real estate deals in East Tennessee.

While Shuler’s office maintains the exoneration will put the issue to bed, opponents in the 11th Congressional District are keen to use information that surfaced during a series of inquiries to weaken the congressman’s position going into an election year.

Last Wednesday, the House Ethics Committee sent a letter to Shuler informing him that he had been cleared of any wrongdoing. It refuted claims that Shuler had used his influence on a congressional committee that oversees the Tennessee Valley Authority to garner preferential treatment for The Cove at Blackberry Ridge, a lakeside development in which he holds an ownership stake.

“We’re just glad it’s over,” said Doug Abrahms, Shuler’s director of communications. “This has dragged on for several months, and this will put an end to the issue.”

The allegations have hounded Shuler since June when the TVA Office of the Inspector General released a report that acknowledged the congressman had “contributed to the appearance of preferential treatment by continuing to pursue water access for Blackberry while a part owner of Blackberry and while sitting on a congressional committee with direct oversight of the very agency from which Blackberry was seeking a permit for water access.”

The pressure on Shuler intensified in September when the Knoxville News obtained an internal TVA personnel report that showed an employee had lied about the level of contact between Shuler and the TVA during its initial review process.

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While the House committee’s findings last week –– which reference reports from the TVA Inspector General’s office and the Federal Bureau of Investigation –– seem to leave Shuler in the clear, the long-term effects of the allegations on his reputation are not clear.

The letter Shuler’s office received last Wednesday from the House of Representatives Committee on Standards and Official Conduct categorically cleared him of using his influence to affect the outcome of the development’s land exchange application with the TVA’s Maintain and Gain Program.

“The Standards Committee, after thorough review, has determined that your actions in these matters were not improper in any way and did not violate House Rules,” the letter read. “Accordingly, after a careful review of the OIG report and findings, along with other information known to the Committee, the Committee is closing this matter without further action.”

The House committee went one step further in its exoneration, suggesting that Shuler had been made to suffer heightened scrutiny by TVA in an effort to avoid the appearance of political influence.

“In fact, the OIG also stated that it appeared that Blackberry was ‘forced to endure the Maintain and Gain gauntlet while others were simply told they could have their waterfront access,’” the letter said. “In other words, in order to avoid the appearance of partiality, Blackberry was held to a higher standard for approval than were others.”

But not everyone is satisfied that the letter represents the end of the issue, particularly not the Republicans in Shuler’s district who are gearing up for a run against the former Tennessee football star who unseated long-time incumbent Charles Taylor in part because of questions about ethics.

Robert Danos, chair of the Henderson County Republicans, challenged the credibility of the House ethics committee and said the charges leveled against Shuler aren’t going away as a result of last week’s letter.

“It’s not going to go away. We have in black and white that the OIG of the TVA said that Heath Shuler did in fact contact the TVA on behalf of Blackberry Ridge, and Rep. Shuler has denied that,” Danos said. “One of those two things has to be false, and I know which one I believe.”

Danos believes the issue is doubly important for Shuler because he beat Taylor with the help of questions about his ethical conduct.

“I don’t know of any serious observers of the 11th District who don’t believe that the only reason the district elected a Democrat was because of outstanding ethics issues with his predecessor,” Danos said.

Shuler became a partner in the Cove at Blackberry Ridge in 2005 and was elected to Congress in November of 2006. According to a financial statement, Shuler’s investment in the real estate project amounted to between $5 and $25 million.

Following Shuler’s election and his committee appointment, a number of newspapers including the Knoxville News wrote about Shuler’s investment and suggested his committee assignment may have resulted in preferential treatment from TVA.

Blackberry Ridge submitted three applications through the TVA’s Maintain and Gain program to obtain a piece of lakefront property with water frontage in another county. The land swap would have allowed Blackberry Ridge to build a community boat dock and given the development valuable water access.

TVA denied two of the development’s applications before finally accepting a third in May 2008.

In May 2009, partly in response to pressure from the media, TVA released a review of its Maintain and Gain Program that specifically addressed whether Shuler and other people in influential positions had received special treatment from the agency.

While the May report acknowledged Shuler and his staff may have contributed to the appearance of wrongdoing, it concluded that there had been no improper contact between the Congressman and the agency.

“The OIG found no evidence however that either Shuler or his representatives used Shuler’s position as United States Congressman to pressure TVA to grant Blackberry water access,” the review read. “We also note that TVA could have simply granted Blackberry water access and exempted Blackberry from Maintain and Gain process as they did with others.”

The May report could have ended the matter, but in September the Knoxville News got its hands on an internal personnel complaint and a redacted version of the Maintain and Gain review that showed a TVA employee had lied about Shuler’s contact with the agency.

The redacted report found that the TVA employee was “not candid in two respects.” The employee denied knowing that Shuler was an owner in the Blackberry development project “despite evidence [the employee] was fully aware of his ownership status,” and denied that Shuler had contacted TVA regarding Blackberry’s application despite the fact that an internal e-mail showed the employee “knew or should have known otherwise.”

Shuler initially denied that his office had had any contact with the TVA over Blackberry until after the third Maintain and Gain application was accepted, but he later revised that statement when a document with his name on it turned up in the OIG’s redacted report.

In the wake of those discoveries, the Washington Post leaked late last month that the House ethics committee was formally investigating Shuler’s involvement in the Blackberry Ridge development.

Lingering impact

Now that Shuler has been cleared by the House ethics committee, the question becomes how voters will react to the allegations during next year’s election.

Gibbs Knotts, chair of Western Carolina University’s political science department, has co-edited a book on North Carolina politics. Knotts said research into the effects of political scandals has clearly demonstrated that voters react to ethics complaints.

“There’s been quite a bit of research on the impact of political scandals not only on political careers but on people’s attitudes towards government,” Knotts said. “Obviously in this instance he’s been cleared, but the research shows that political scandal does have electoral consequences.”

Knotts said he had not seen research that differentiated between ethics allegations that played out in the media and scandals that were supported by the findings of courts or oversight authorities.

“I don’t know of any studies that have looked at people who have merely been accused of scandals,” Knotts said. “I could come up with an opinion on that, but it wouldn’t be based on research.”

For Knotts, the issue is a grey area that will require strategic interpretation by both parties during the campaign cycle.

“I think there’s a long history of opposing candidates using these types of issues whether they’re legitimate or not,” Knotts said. “I think what the Republicans will have to figure out is walking that tightrope because that kind of strategy can backfire. There’s obviously pros and cons in going in either direction.”

Knots said that historically candidates with strong ethics records and strong internal party support do better at weathering scandals.

While it may seem early to consider Shuler’s exoneration in light of his upcoming election, if Danos’s attitude is a clear indication of Republican strategy, it won’t be the last time the Congressman hears about his ethics record.

So far, at least five Republicans have announced their candidacy for the February primary. With the opposition lining up on the other side of the aisle, Shuler also has to contend with displeasure in his own party stemming from his vote against the House Democrats’ healthcare reform bill.

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