Critics Question Impartiality of SFO Runway Study / Feinstein's husband part-owner of firm conducting report and has 6% stake in Northwest Airlines

2000-06-12 04:00:00 PDT San Francisco -- Richard Blum, financier husband of Sen. Dianne Feinstein and a Northwest Airlines director, also owns part of the firm studying the environmental impact of San Francisco airport's planned runway expansion -- a dual role that troubles environmentalists who oppose the project.

Some environmental advocates worry that Blum's position with the airline could affect the impartiality of the study, which looks at how much damage would be caused by pouring as much as 2.5 square miles of landfill into the bay and examines possible alternatives.

Several environmentalists also said they fear that Blum's role might affect Feinstein's position on the runway project.

Blum is vice chairman and controls almost 40 percent of the San Francisco-based engineering giant URS Corp., which is preparing the environmental impact report. He also has been a Northwest Airlines director since 1989 and controls almost 6 percent of the company, according to federal documents.

Airlines have been strong proponents of adding runway capacity at the airport, which is plagued by delays during bad weather. Northwest is the world's fourth-largest airline and has 20 round-trip flights from San Francisco daily, accounting for about 1 percent of its flights.

Blum's position in both companies "makes me nervous, and it makes me want to know more," said V. John White, a Sierra Club lobbyist. "This project has more impact on the bay and the environment than any proposed in the last 40 years, and the fight over it promises to be a donnybrook."

The controversy over Blum's holdings -- which are listed in documents at the Securities and Exchange Commission -- comes at a time when the battle is intensifying over the airport's plans to expand its landing capacity.

Blum was out of the country and unavailable for comment. Spokesmen for Blum, URS and Northwest denied any conflict of interest.

Owen Blicksilver, a Blum spokesman who spoke with his boss after being queried by The Chronicle, said the financier knew nothing about URS' runway contract.

"Blum has no knowledge of any contract that URS lets -- they have 300 offices worldwide," Blicksilver said. What's more, he said, "Northwest has a minuscule stake in San Francisco, and Mr. Blum has no interest whatsoever in whether the airport is expanded."

URS spokesman Paul Verbinnen said that under the firm's policy, no one in the company would have discussed the project with Blum or other directors.

Northwest executive vice president Doug Steenland said the airline has "no expansion plans tied to expansion of the airport."

The Federal Aviation Administration, which picked URS to do the impact report from among five competing firms, was unaware of Blum's interest in the company, said John Pfeifer, manager of the FAA's airports district office.

Federal regulations require contractors to file a statement "specifying that they have no financial interest" in a project's outcome. URS filed that statement April 19.

Experts on conflict-of-interest questions differed on whether Blum's role poses a conflict.

Nell Minow, co-author of three books about corporate governance and editor of the Corporate Library Web site, said Blum's role, "just as a matter of appearance, is very troubling. It's like being the umpire and the pitcher for the same game."

Terry Cooper, a professor of public administration at the University of Southern California, said such an issue turns on how the public perceives it. "Perceptions of conflicts of interest are as destructive of public trust as actual conflicts of interest."

But David Vogel, a professor of business ethics at the University of California at Berkeley, said, "It strains credulity to think because Blum owns some shares of an airline, that is going to affect the report by these consultants."

So far, URS has been paid $6.3 million for its work assessing the runway project. The report is due next year, after which local and federal agencies must grant permits before the expansion can begin.

In the political arena, Mayor Willie Brown has named his parking and traffic director, Stuart Sunshine, and a former member of President Clinton's impeachment defense team, Karen Skelton, to push for government approval of the project.

MUCH OPPOSITION TO LANDFILL

Many environmental groups fiercely oppose any landfill for the airport. Blum's involvement was first raised by the Natural Resources News Service, a project of the Washington, D.C.-based nonprofit Public Education Center, which has taken no position on the runways.

David Lewis, executive director of the Save the Bay Association, said the public needs to be sure the environmental report is based on merit.

"There is no question that the airport has decided the only way to handle their congestion problem is with runways in the bay, but the airport knows it must appear to be cooperating with the government study of impacts and alternatives," Lewis said.

The airport's plan envisions three long fingers of landfill into the bay. The airport now has two sets of parallel runways 750 feet apart and wants two sets 4,300 feet apart, enabling more planes to take off and land in all conditions.

At present, the airport limits itself to one runway each for takeoff and landing in bad weather.

Both Amy Quirk of the Alliance for a Clean Waterfront and Ralph Nobles, vice chairman of San Mateo County's Planning Commission and a board member of the Citizens Committee to Complete the Refuge, said they want to know more about Blum's role. "People have to think about whether the firm could do an impartial job," Nobles said.

One Audubon Society leader had a different take, saying he took for granted the bias of consultants hired to study projects.

"The fact Blum owns part of the consulting firm shouldn't make that much of a difference," said Arthur Feinstein, executive director of the Golden Gate Audubon Society. He is not related to the senator.

Several environmentalists said they feared Blum's link to the airport through URS and Northwest could affect his wife's decisions on the expansion.

"We hope Dianne Feinstein will consider the view of all her constituents before taking a position," said Jane Seleznow, chair of the Sierra Club's airport project committee.

Feinstein has clearly done some wrestling on the issue of her husband's business dealings.

FEINSTEIN SOUGHT ADVICE

Responding to a query from Feinstein, the Senate Ethics Committee's counsel wrote October 14 that unless she knew that specific legislation had been drafted to benefit URS, she could vote on general appropriation measures without violating conflict-of-interest codes.

Although Feinstein as a senator has no direct involvement in the expansion, airport Deputy General Manager Peter Nardoza said the airport will apply for federal grants for part of the project.

Feinstein's office said the senator had no knowledge of URS' work.

In a statement, Feinstein noted that the expansion was a city matter. But she added, "I travel into the airport all the time and I know what it is like. The weather gets bad and effectively the airport stops operations. For a major American airport, that is an untenable situation."

Feinstein has not said how the problem should be tackled.

As the debate continues over the airport expansion project, the findings of the impact report are certain to be a crucial element in the mix.

IMPARTIALITY CRITICAL

"It's important that such a review be impartial," said Nobles, who has lobbied for the bay's restoration for years. "If that doesn't happen, it short-circuits the whole procedure."