Republicans Say Perez Faces Questions Over Housing Case

Senate Republicans say Thomas Perez, a Justice Department official who’s been nominated to lead the U.S. Labor Department, faces tough questions about the role he played negotiating a deal that caused the city of St. Paul, Minnesota, to agree to drop a Supreme Court case.

Senators including Pat Roberts of Kansas, a top Republican on the Senate labor committee that will consider the nomination, say they want to examine whether Perez acted improperly in his role in St. Paul’s decision to drop the high-court appeal. Fair- lending advocates said the case would have harmed a central enforcement tenet in housing discrimination law.

“It’s of real concern to us, and it’s one thing in a long list of things where we think this person is ill-advised,” Roberts said in an interview.

Senator Tom Harkin of Iowa, the Democratic chairman of the labor panel, said Perez did nothing wrong in brokering a deal that had St. Paul drop its appeal in exchange for the Justice Department declining to join two whistle-blower lawsuits against the city. Those two lawsuits alleged the city misused federal housing dollars and might have secured as much as $180 million, according to the Republican lawmakers probing the case.

Under the False Claims Act, the Justice Department can decide to join, or intervene, privately filed whistle-blower cases. The department recovered a record $3.3 billion in suits filed by whistle-blowers in the 2012 fiscal year, the agency said in December.

‘Nothing There’

“We’ll address all that,” Harkin said of his committee’s confirmation proceedings. “I’ve looked into it and there’s nothing there. Everything was proper. I think Tom Perez is an outstanding individual, and when all this dust settles I think people will recognize that he’s an excellent person to take over the Department of Labor.”

If confirmed by the Senate, Perez would replace Hilda Solis, who resigned in January, and would play a prominent part in pushing President Barack Obama’s agenda on issues including an immigration overhaul and raising the nation’s minimum wage to $9 an hour from $7.25. Perez, 51, has led the Justice Department’s civil rights unit since 2009.

Obama nominated Perez on March 18 even as congressional investigators continue to press for more details about his role in the St. Paul deal.

Perez played a major role in securing the agreement, according to congressional investigators. In a September 2012 letter, four Republican lawmakers said documents they had obtained show Perez “orchestrated a deal to induce the city to drop its Supreme Court challenge.”

Involvement Questioned

The documents included e-mails from career attorneys at the department questioning why senior Justice Department officials were getting involved in the process, according to the congressional letter. In October 2011, lawyers in the department’s civil division recommended the government join one of the whistle-blower lawsuits. By February, that decision had been reversed, lawmakers said. On Feb. 10, the city requested the Supreme Court dismiss its appeal.

Justice Department officials said Perez’s actions were cleared by an ethics official and that the deal was not, as congressional investigators have said, a “quid pro quo.”

“The resolution reached in these cases was in the best interests of the U.S,” said Dena Iverson, a Justice Department spokeswoman. “The decision was appropriate, and followed an examination of the relevant facts, legal and policy considerations at issue, and made after Mr. Perez had consulted with career ethics officers.”

‘Quid Pro Quo’

The building confirmation battle is being joined by other Republicans on the Senate Judiciary Committee, where Senator Charles Grassley of Iowa, the top Republican, is accusing Perez of arranging a “quid pro quo” deal. Jeff Sessions, an Alabama Republican who also serves on the panel, said the St. Paul matter is “a very big deal” that threatens to derail the confirmation.

“It was the wrong thing to do,” Sessions said in an interview. “It was a highly important legal issue that he was afraid he would lose, so he basically created an incentive -- some might call it a bribe -- for a city not to pursue this legal case.”

Senator Johnny Isakson, a Georgia Republican and member of the labor committee, said the St. Paul negotiations by Perez add to a list of reasons why he questions whether the nominee should be elevated to run the Labor Department.

Other Objections

“Everything I know raises questions about his ability to serve as labor secretary, and he’s going to have to satisfy me that he has qualifications that I don’t think he has,” he said.

The deal between the Justice Department and the city isn’t the only thing Republicans have objected in Perez’s background. The nomination was met by opposition from Republicans, including one -- Senator David Vitter -- who has committed to blocking Perez’s confirmation over the enforcement of a voting rights law in Vitter’s home state of Louisiana.

Perez comes from a Justice Department office with a history of political infighting. Cases specifically handled by the voting unit within the civil-rights division have drawn partisan criticism which has carried over into the lawyers and employees in the unit, according to an inspector general’s report released last week.

“We believe the high partisan stakes associated with some of the statutes that the Voting Section enforces have contributed to polarization and mistrust within the section,” the report said.

‘Staff Conflict’

Perez, in his response to the report, said “without question, the voting section in January 2009 had low morale and an unacceptable degree of staff conflict.” The report said the civil-rights division under his watch has improved and that many of the issues that plagued the division during the Bush administration, including hiring practices, are in better shape.

Still, the report casts blame on both the Bush and Obama administrations for the polarized nature of the division, and Perez acknowledged there was more work to be done.

House Judiciary Committee Chairman Bob Goodlatte has pledged to hold a hearing on the report, and Representative Frank Wolf, who is chairman of a subcommittee that oversees the Justice Department’s budget, said an “outside, independent panel” should conduct a review of the unit and its policies. Goodlatte and Wolf are both Republicans from Virginia.

Ten current or former state attorneys general pushed back on the idea that Perez has been overtly political, saying the lawyer has been “fundamentally fair” in his role at the Justice Department.

“He is committed to justice and the rule of law and able to work across party and philosophical lines to achieve just results,” the current or former state officials said yesterday in a statement. The group included attorneys general Kamala Harris of California, Beau Biden of Delaware, and Lisa Madigan of Illinois -- all Democrats -- and Mark Shurtleff, the former Republican attorney general of Utah.

To contact the reporters on this story: Laura Litvan in Washington at llitvan@bloomberg.net; Phil Mattingly in Washington at pmattingly@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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