in Houston, Texas

In 2007, U.S. Sen. Kay Bailey Hutchison boasted how she helped secure $700 million in federal funding to expand a mass transit line in Dallas. But here's what she forgot to tell you: The law firm of her husband, Ray Hutchison, worked on the bond financing for the same project, earning hundreds of thousands of dollars in hourly fees.

In the long run-up before Hutchison officially announced her candidacy for governor this week, the popular GOP lawmaker has fended off criticism that as a member of the Senate appropriations committee, she helped dole out money to her husband's deep-pocketed municipal clients.

A former politician himself, having served in the Texas state House decades ago before mounting a doomed candidacy for governor in 1978, Ray Hutchison may be the state's pre-eminent bond counsel, helping agencies and city governments from Texas to Alaska sell off debt to finance massive public projects.

Meanwhile, in her 16 years as a U.S. senator, Kay Bailey Hutchison has provided earmarks for several of her husband's clients including the city of Dallas, Parkland Hospital and Dallas Area Rapid Transit (DART).

But it's the senator's support for a costly rail line in Dallas that may raise the toughest questions about her and her husband's ethics. That's because her push for the project in the corridors of Washington led to a big payday for her husband's white-shoe law firm, Vinson & Elkins.

Next month, DART plans to debut the first phase of its new Green Line, a $1.8 billion expansion that will ultimately add 20 new stations to the agency's bustling light-rail network while helping connect the city of Dallas to many of its far-flung suburbs. The Green Line, which will entail laying down nearly 30 miles of track, is a popular, business-friendly project avidly supported by Republicans and Democrats alike.

Still, the train might not have left the station were it not for Texas' senior senator, who is a staunch supporter of a public option in transportation. In 2006, Hutchison helped obtain a $700 million grant from the Federal Transportation Administration (FTA)--the second largest in the agency's history.

Hutchison would later brag about the role she played in securing the cash for the Green Line in a post on her Web site. She also offered a warm public statement about the rail project and DART in general, neglecting to mention the agency also happens to be one of her husband's most loyal clients.

"This wasn't easy. Dallas and every single suburb stepped up to the plate to support this," said the senator at the grant-signing ceremony. "We wouldn't be here today if the FTA didn't have complete confidence in DART. This is a well-run agency, and it has been so since its beginning."

Vinson & Elkins earned more than $350K on 2008 bond sale

But the grant from the FTA--even with money coupled from the agency's budget-- wasn't enough to pay for the entire project. So in July 2008, the agency sold a $740 million revenue bond to pick up the remaining costs of the Green Line.

On that deal, Vinson & Elkins, served as the co-bond counsel, a lucrative legal job that facilitates the selling of public debt. For their services on the Green Line bond, Vinson & Elkins earned more than $350,000 in hourly fees, according to DART spokesman Morgan Lyons.

Although Ray Hutchison did not work on directly on this deal, he is the firm's pre-eminent expert on the transit agency having served as its lawyer since its inception in 1983. Because of that experience, it may be safe to say that DART would not be working with Vinson & Elkins were it not for the senator's husband.

Interestingly, in May, Hutchison again came to the aid of her husband's client, helping finagle $80 million in stimulus money to hasten the completion of the Green Line project.

That Ray Hutchison's public lawyering may pose an ethical headache to his wife is not a surprise to William Canfield, a Washington lawyer and former attorney for several House and Senate committees.

At the request of a private client -- he won't identify whom but says it's not Gov. Rick Perry or his campaign -- Canfield penned a detailed memo on whether it is a conflict for the senator to secure earmarks and other funding for her husband's municipal clients.

He doesn't offer a definitive answer but concludes that the veteran lawmaker certainly has a problem with appearances. Her work as a senator, he notes, benefits the "very same state and local government clients who handsomely compensate her husband for his work on their municipal bond transactions."

Canfield also takes issue with a letter Hutchison wrote to the ranking member of the Senate Appropriations Committee. In the correspondence, Hutchison fails to identify-- as is required by law --the recipients of her earmark requests, as well as their purpose. That lack of transparency may only exacerbate the appearance of an ethical problem for Hutchison.

Hutchison's campaign did not return repeated requests for comment.

"Her conduct can be fairly criticized for not living up to the ethical standards imposed on all Members of the United States Senate," Canfield writes.

In an interview with Texas Watchdog, the Washington attorney stresses that he can't say for sure if the senator has an actual conflict of interest. That really depends on how her husband's clients compensate him. Does his firm reward him directly for his public sector lawyering, or is he paid regardless of how much work he does on behalf of the likes of DART and the city of Dallas?

Still, Canfield says that the senator should have just avoided these types of thorny questions from the start.

"As a lawyer, if she had asked me for my opinion and set forth the facts that his municipal bond clients would go before her asking for an earmark, I would say, as an abundance of caution, if you're going to be involved it has to be at an arm's length or just recuse yourself from getting earmarks for Ray's clients," he says.

Of course, the question then is whether they'd still be his clients.

Contact Matt Pulle at matt@texaswatchdog.org or 713-980-9777.


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