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Brothers of the Road

Back in April 1994, Roger Hord, the transportation policy director for the Greater Houston Partnership, heard some troubling news from North Texas. Envisioning a river of trucks running from Mexico to Canada because of the North American Free Trade Agreement, officials along Interstate 35 had banded together in Dallas and declared I-35 to be the first "NAFTA highway" and a top priority for federal highway improvements.

Nothing had changed about I-35: It still began at Laredo on the Mexican border, ran straight through San Antonio, Austin and Dallas-Fort Worth, then cut through the Midwest and forked into tributaries to the Canadian border. What was different was the packaging, and the fact that cities along I-35 were promoting the highway for the NAFTA designation was alarming to Houston boosters like Hord. If they didn't come up with their own NAFTA marketing plan, billions of federal highway dollars might disappear down the wrong route.

They could argue that U.S. Highway 59, which goes from Texarkana south to Houston and then southwest to Laredo, also would be overrun with Mexican trucks. U.S. highways 77 and 281 run straight south from U.S. 59 through the King Ranch to the southernmost point of Texas in the Rio Grande Valley, where several small cities have built toll bridges to carry the predicted river of trade from Mexico. That corridor to South Texas, and 20 others around the nation, were already being considered by federal planners for upgrading to interstate status. Clearly the nation couldn't afford to upgrade all 21 proposed corridors to interstate standards. How would the nation's highway planners and legislators decide? What Houston needed was priority, a NAFTA priority.

By that December, Hord and the Partnership had formed the Alliance for I-69 Texas. A nonprofit organization of approximately 75 Texas counties, cities and corporations with an annual budget of $500,000 in 1996, the coalition has received $100,000 from Houston taxpayers during the last three years. The I-69 route would link the impoverished towns in the Valley to Houston and points north by upgrading U.S. 59 to a controlled-access interstate at the cost of roughly $5 million a mile. The new NAFTA highway would end in Indianapolis, where the existing Interstate 69 feeds into Michigan and Canada. And making the new route even more politically palatable, I-69 would pass through Arkansas, Tennessee and Mississippi, the home states of the president, vice president and Senate majority leader.

Regardless of which alignment I-69 took northeast of Texas, it had one obvious supporter in Congressman Tom DeLay. The second-ranking Republican on a House subcommittee for appropriations that is crucial for highway spending, DeLay has always been effective in bringing federal transportation dollars to the Houston area, and U.S. 59 runs straight through his hometown of Sugar Land. But as Congress prepared to renew a six-year, $175 billion highway spending package, the Texas alliance needed someone in Washington to push its proposals. It needed a lobbyist.

One name that surfaced -- no one seems willing to say exactly who recommended him or how his name became known -- was that of a lawyer with no previous lobbying experience and no background in the highway bureaucracies: Randy DeLay, Tom's younger brother.

Before Tom DeLay was elected House majority whip in January 1995, Randy DeLay had spent the previous ten years in a series of failed business ventures in Corpus Christi and Houston that eventually led to his filing for bankruptcy in 1992. But within three months after Tom DeLay's ascension as the third most powerful Republican congressman in the country, Randy DeLay emerged as a six-figure-a-year Washington lobbyist whose clients have included the Mexican cement monopoly Cemex, the city of Houston, Houston Lighting & Power, Union Pacific Railroad and the Alliance for I-69 Texas.

Randy DeLay has been unsurprisingly successful in winning support for his clients' causes from his brother. Although a Washington watchdog group has filed a House ethics complaint about the DeLay brothers' lobbying relationships and Tom DeLay's strong-arm tactics with political contributors, the complaint seems to be going nowhere.

The NAFTA highway is, however, going somewhere, with its supporters predicting a nearly billion-dollar appropriation in the next several months, even though the existing highways are not being overwhelmed by Mexican trucks as predicted. But the NAFTA highway is not a means of getting from Mexico to Canada so much as a rationale for drawing highway money to one route and away from others. It will eventually pour billions of dollars into the depressed economies of South Texas, the Mississippi Delta and rural Arkansas. It's not a transportation project so much as an economic development project. And if Randy DeLay is a beneficiary? What can you say except God knows, and so does Tom, that Randy needed the work.

"Do you have a big brother?" asked Randy DeLay last August in an interview with Knight-Ridder reporter Frank Greve. "Does your big brother ever listen to you or believe anything you tell him?"  

Randy DeLay's attempt to downplay his influence on his brother seems a strange message to send to potential clients. According to Fort Bend County Republican sources, during the last several years Randy DeLay has often substituted for Tom at civic functions when his brother was unavailable, and said a few words on the congressman's behalf.

Although Tom DeLay did not respond to requests for an interview from the Houston Press, he issued a statement several months ago in response to concerns about his brother's lobbying work. "Be assured there is no conflict of interest," DeLay wrote. "I have taken steps to make Randy's access to my office more difficult than any other registered lobbyist or constituent, except for purely personal visits."

It's comforting to know that Randy DeLay is having a tough time getting in to lobby his brother. But it's not as though Randy has been hired to turn Tom around on issues. Clients who hire Randy DeLay seem to have an unerring instinct for hiring him to work on an issue that Tom already supports. Support like Tom's can't be bought, but a gesture of appreciation never hurts.

And besides, Tom owes Randy a favor. From 1993 to 1994 Randy acted, evidently without compensation, as his older brother's lawyer in a lawsuit involving the sale of Tom's pest control company [see "The Exterminator" in the Nov. 23, 1995 Press]. That suit ended when a judge ordered the DeLays to settle with Tom's former business partner, Robert Blankenship, over the brothers' attempt to sell Albo Pest Control out from under Blankenship.

It was Randy DeLay who negotiated the proposed sale that Blankenship said would have cheated him out of his one-third interest in Albo, and it was Randy who represented Tom DeLay in court proceedings for nearly a year until the case was settled in November 1994, just as the Republicans swept to a majority in Congress and Tom DeLay's star was rising as the next majority whip of the U.S. House of Representatives.

While Tom DeLay was toiling in Congress, his brother Randy seemed headed for a career as a businessman and lawyer, not as a lobbyist. A 1976 graduate of the South Texas College of Law, Randy, 47, is three years younger than Tom. He's a stockier version of his older brother, with the same thick helmet of hair, and lives not far from him near a golf course in Sugar Land.

The two grew up in the Corpus Christi area, where their wildcatter father, Charlie DeLay, was something of a legend in the region. Randy DeLay, according to one former business associate, is "an affable, South Texas kind of guy, an extrovert," who loved to go hunting on a small place near Beeville.

By the mid-'80s, Randy DeLay was active in Corpus Christi in the Kiwanis Club and served on the board of a children's charity hospital. He owned a popular Mexican restaurant called Josie's, held shares in an oil-drilling venture with his father and had investments in beach properties. In 1987 he helped his uncle, William DeLay, set up Oilfield Distribution Company, whose purpose was to deliver drilling mud to Texas well sites for three major manufacturers of the product.

But all these ventures came undone. The drilling venture, Well Drillers Incorporated, had relied on the expertise of Randy's father, Charlie DeLay, but it went bust with the collapse of oil prices. In November 1988, several shareholders, including Houston lawyer Howard Wolf, sued Randy DeLay for failure to pay a $65,000 note to the shareholders' trust. Randy countersued, saying that associates of the venture had defrauded the trust by concealing the sale of a $300,000 piece of drilling equipment for $30,000, and he accused Wolf of failing to investigate the problem. In his suit, Randy claimed a long-time family friend and business associate had lied about the sale of the equipment. DeLay said he knew the man had been untruthful because DeLay knew him to stutter when he lied, and he had stuttered when DeLay confronted him about the equipment. The two sides settled in February 1990, with Randy DeLay buying the drilling equipment from the trust through a company he then controlled, Oilfield Distribution Company.

By that time, according to court documents, Randy DeLay was making $120,000 a year as president and CEO of Oilfield Distribution. He ran the company, which had several hundred employees, from a Houston office on the South Loop stuffed with his African hunting trophies. But when Randy DeLay used Oilfield Distribution to buy the drilling equipment and settle his dispute over his drilling venture, his uncle Bill got mad. William DeLay refused to talk about the disagreement, but his actions were evident from court records. He and five other partners sold the company out from under Randy without consulting him, and the new owners fired him at the end of April 1990.  

To make matters worse, the new owners sued the employee leasing company that Randy DeLay had created to manage the insurance, payroll and benefits for Oilfield Distribution. In April, Randy DeLay sold the employee leasing company to a former hospital administrator from Corpus Christi who he had brought in to run the operation, David W. Anderson. The new owners of Oilfield Distribution contended that DeLay had changed the employee leasing contract when he was not authorized to do so, and quit paying its invoices. Anderson, who was being sued by the new owners as well, sued Randy DeLay for misrepresenting his authority to renegotiate the employee leasing arrangement and claimed DeLay's conduct was "willful, wanton, intentional, malicious, reckless and grossly negligent."

By January 1992, Randy DeLay was acting as his own lawyer in the suit. An attempt to mediate it was called off when he declared that he didn't have the money to pay his share of the mediator's fees.

Randy had other, more pressing problems. Two years earlier, First National Bank of Corpus Christi had sued him for $131,000 and attorney's fees for loans he had taken out for his Mexican restaurant. That suit was moved to federal court when the bank failed and the Federal Deposit Insurance Corporation took it over. Randy signed over his shares of his beach property investments as collateral for the loan, but evidently that was not enough to settle his account. In May 1992, the FDIC dropped its suit against Randy, noting that he had filed for bankruptcy under Chapter 7. A few months later, Randy DeLay was dropped from the Oilfield Distribution case for the same reason.

By 1993, Randy DeLay tried to help Tom close out his pest control business by using the same tactic that he says his uncle had used on him. He tried to sell the business without the knowledge of a minority partner. The tactic failed, but Randy would soon go on to better work as a lobbyist.

The nation's leading paid advocate for I-69 works not out of Texas, but Indiana. Jim Newland, a former newspaper reporter who did public relations for a consortium of Indiana highway contractors, came out of retirement to lead the I-69 Mid-Continent Highway Coalition, a seven-state organization in which the Alliance for I-69 Texas is a major player. When I-69 is complete, it will connect Evansville in the southeast corner of Indiana to Indianapolis. Newland says the state had tried for years to get an interstate highway constructed along the route, but Congress wasn't much interested until the NAFTA rationale came along.

Although Indiana farmers have protested that the 175-mile-long route will destroy farmland and save only eight minutes of travel time, Newland writes such protest off as "personal, parochial or environmental."

"Throw out the shadows in this," he urges, "and what we are trying to do is prove this road is absolutely necessary for the future of this country."

Indeed, the I-69 Coalition has mounted impressive statistics showing that 40 percent of the manufacturing capacity of the nation lies near this route. Preliminary federal studies show that the highway will return $1.57 for every dollar invested. An eager, low-cost labor force lives along the route, especially in the southern states, and federal law provides that new highways should be built where they improve areas of low employment. And if some of those jobs will involve the relocation of plants and businesses from other parts of the country, so be it, Newland argues.

Testimonials from Tom DeLay in support of I-69 are displayed prominently in the coalition's four-color brochures, so it comes as no surprise to Newland to hear questions about Randy DeLay's involvement.

"I'm well aware of the stories about the DeLays," Newland says, "but we feel that Randy DeLay is a good man, and he couldn't help it if he was related to one of the heavyweights."

One of the stories to which Newland is referring concerns Tom DeLay's efforts on behalf of the Mexican cement monopoly Cemex. During the early '90s, Congress had erected tariffs to prevent the Mexican firm from "dumping" cement in the United States and running U.S. companies out of business. In an unsolicited opinion piece for the Houston Chronicle that was published in August 1995, Tom DeLay argued for the deregulation of the cement industry without mentioning that his brother had been a registered foreign lobbyist for Cemex for the previous six months. Tom DeLay also circulated a letter in the House urging members to support his position. Randy DeLay succeeded in organizing more than a dozen meetings of supporters in Congress and staff members. In disclosure forms required of federal lobbyists, DeLay reported receiving $233,000 for his work with Cemex.  

A Washington publication that covers Congress, Roll Call, exposed the relationship in October 1995. The DeLays began a round of denials, claiming there was nothing improper about Tom DeLay's efforts on behalf of his brother's clients, but editorialists for the Chronicle and the New York Times spluttered and scolded.

The stories seemed to have little effect, for in 1996 Randy DeLay had a very good year. In February he registered as lobbyist for CC Distributors Incorporated of Corpus Christi, a hardware wholesaler seeking defense contracts, and received $20,000, according to his disclosure filings, to monitor the Defense Authorization Act. That same month, Union Pacific Railroad hired him for $10,000 "for the edification of the Texas congressional delegation" on a gigantic merger that would reduce rail competition in Texas, and which his brother supported emphatically. In April 1996, the city of Houston paid Randy DeLay $20,0000 to lobby on behalf of a bill to make professional sports team owners like Bud Adams compensate cities if they take their teams away. Tom DeLay broke from his usual anti-regulatory rhetoric to speak in support of the bill.

Randy DeLay was also paid $20,000 last year by Dell US, the sales end of Dell Computer, to seek government sales opportunities, and $10,000 by S & B Infrastructure of Houston, a large engineering and construction firm, to identify new business opportunities.

For a neophyte, Randy DeLay has been highly successful during his first two and a half years as a lobbyist. His clients have paid him approximately three-quarters of a million dollars in income and expenses. He now operates from an office in a high-rise tower in west Houston, convenient to his home in Sugar Land, and flies to Washington as needed. The receptionist who answers the phone announces his company as the "DeLay Group," though Randy DeLay wouldn't talk when the Press phoned to speak with him for this story.

Although the I-69 Mid-Continent Highway Coalition is headquartered in Indiana, its center of gravity resides in Houston, with the Greater Houston Partnership calling the shots on lobbying. The Partnership's Roger Hord was understandably tightlipped about why he picked Randy DeLay to lobby on behalf of I-69, but his tactics reveal that he hired Randy not so much for what he knew as who he knew.

Hord says that at the end of 1994, the I-69 proponents asked him to find suitable candidates on whom to spend the coalition's $300,000-a-year lobbying budget. One experienced lobbyist surfaced who seemed a perfect fit. She was Carolina Mederos, a former transportation official for the Reagan administration and an employee of Patton Boggs & Blow, a heavyweight Washington lobbying firm with a reputation for being able to deal with Democratic administrations.

The other was Randy DeLay. Hord says DeLay was a "secondary lobbyist" whose work was coordinated by Mederos. "He worked under Carolina's direction and particularly with the Republicans," says Hord, "but he also helped with the Democrats."

Hord has no complaints about DeLay's work, for which the congressman's brother has received approximately $190,000 during the last two years. Lobbyists are "paid to think about this constantly," Hord says, "and to become aware of the competing interests, and position our argument to the flow of the issues."

With the project positioned for approval, DeLay's work for the I-69 coalition ended in March. It would be better to have two lobbyists on the ground, Hord says, but the I-69 Coalition has not been as successful as it would have liked in raising money. So when it had to choose between an experienced lobbyist such as Carolina Mederos and Randy DeLay, DeLay got the ax.

But don't cry for Randy. He's still got a good thing going in the Valley. If the NAFTA highway never passes through Houston, it could be argued that the city wouldn't suffer any long-term losses. Houston is still a major port and has an international airport. U.S. 59 is still a four-lane road and can handle plenty of trucks, if it's maintained in decent condition.

But down in the Valley, where unemployment approaches 18 percent, where civic leaders talk about having a population of two to three million people when residents of both sides of the border are counted, the stakes are high. The region is desperate to have an interstate highway, not just to get trucks through their towns, but to attract factories and businesses along it for their low-paid workers -- not to mention the billion dollars of construction costs that would eventually flow into the area.  

Although some of the maps of the I-69 Coalition seem to indicate only one NAFTA highway to the Valley, NAFTA highway proponents are pushing for two interstate highways to the Valley. Separated by only 25 miles, one route would follow U.S. 77 to Harlingen and Brownsville, cities that have the most economic clout.

The other would follow U.S. 281 to the west, passing through Hidalgo County and the towns of McAllen and Edinburg and ending at the border in Pharr, a town that has recently built a $24 million toll bridge suffering from low revenues. So it should come as no surprise that these towns banded together and hired Randy DeLay too, for a two-year contract at $10,000 a month, paying him through the Pharr Economic Development Corporation. They love what he's done for them, or at least what he appears to have done for them.

For one thing, he has taught them how to raise money for a congressman from Altoona, Pennsylvania, named Bud Shuster. As the chairman of the House Committee on Transportation and Infrastructure, Shuster has a reputation as the ultimate pork barreler in Congress. He can approve or kill any federal highway project in the country, and his ethics have come under serious question during the last couple of years.

Like Tom DeLay, Shuster has a close relationship with a lobbyist. In his case, it's his former longtime staff director, Ann Eppard. Eppard turned lobbyist once her old boss became a powerful committee chairman, and their relationship has been the subject of a House ethics complaint. A federal grand jury is probing their involvement with two of Shuster's political contributors. The two men were embroiled in land disputes arising out of the construction of a $7 billion tunnel beneath Boston Harbor using federal money.

Randy DeLay helped the Hidalgo County towns organize a fundraiser in the Valley for Shuster that netted $25,000 for him. On August 29, 1995, a week before Shuster's committee passed a bill that designated U.S. 59 for I-69 status, Randy DeLay also organized a luncheon at the Four Seasons in Houston that raised $70,000 for Shuster.

The news for Hidalgo County has been good. In a study released last month, federal highway consultants concluded that both interstate routes to the Valley could be economically justified, and should be built.

Not that any part of Texas is being overrun by trucks from Mexico yet. Anticipating the river of trade from NAFTA, in 1993 the Texas Highway Department began measuring truck traffic along 20 different routes from Mexico inside the Texas border. The Valley routes showed an average increase of seven to eight trucks a day, hardly enough traffic to justify building a new interstate highway. But carrying capacity is not what building I-69 is about. I-69 is about jobs.

And if a congressman's brother needs one so that Texas can bring more jobs and more highways, few people are going to be upset. When Ralph Nader's Congressional Accountability Project tried to find members of Congress to sponsor its ethics complaints against Tom DeLay, it had to find retiring members to sign the letter.

Gary Ruskin, the director of Nader's outfit, says the DeLays' relationship "looks like influence peddling to us, and that's very bad for a democracy. Democracy ought to be run by votes and not by the purchase of influence by corporate and wealthy elites."

Ruskin, who has also filed a complaint about the relationship of Shuster and Eppard, has been particularly critical of the House Ethics Committee's delay in acting on the complaints.

"It's been 15 months and we don't even have an investigation started," he says. "That's outrageous, and shows how poorly the Ethics Committee serves the American public."

There is some opposition to the NAFTA highway from the Coalition Against NAFTA Highways, a consortium of environmental groups that includes the Coalition for a Paving Moratorium, the Sierra Club and the Fossil Fuels Policy Action Institute. These groups want Americans to cut back on driving and new highway construction. Federal studies indicate that I-69 will pass through some of the South's most precious wetlands, and much environmental work will have to be done to avoid destroying them. The Coalition Against NAFTA Highways is sending one of its leading speakers across the country to speak out against the NAFTA highways this month. He's bringing his guitar.

He's not likely to turn back the economic steamroller that is headed his way. The NAFTA highway is all but a done deal. Randy DeLay is just one of the first of the underemployed to benefit from it. And what goes around comes around. Now that he's a solvent businessman again, last year he contributed $4,000 to Bud Shuster's campaign and nearly $24,000 to Tom DeLay's campaign and political action committee.  

Not that everything is going his way. In his recent federal lobbying filings, Randy DeLay indicates that seven of his nine clients are "inactive " and not paying him a dime. His only currently active client on the federal level seems to be the Valley towns of Hidalgo County.

But his Austin lobbying filings show that Houston Industries, owner of Houston Lighting & Power, has him on the payroll at between $50,000 and $100,000. "You don't see many Houston-based lobbyists with the state and national connections that he has," says Bruce Gibson, senior vice president for governmental affairs at Houston Industries.

No indeed, and it's amazing how quickly they fell into place. It looks as though Randy DeLay has finally found his niche. Last year, he got rid of what must have been a nagging reminder of his failed business life before he became a bigtime lobbyist. He donated his 1988 Cadillac to Tom's favorite Sugar Land charity.


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