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As Amazon.com flexes its muscle, Seattle moves to curb corporate political donations


SEATTLE (Reuters) – Seattle, the Pacific Northwest city where home-grown online retailer Amazon.com has increasingly flexed its political muscle, is expected to approve on Monday legislation banning political contributions by companies with at least 5% foreign ownership.

FILE PHOTO: People take in the view from the top of the Space Needle in this aerial photo in Seattle, Washington, U.S. March 21, 2019. Picture taken March 21, 2019. REUTERS/Lindsey Wasson

The move is likely to trigger renewed debate on the legality of corporate donations in U.S. elections while drawing an immediate court challenge.

A six-member committee of Seattle City Council has already unanimously approved the measure, making it almost certain that the full nine-member council will pass it on Monday.

The bill is widely viewed as aimed at reining in political spending from companies such as Am

azon.com (AMZN.O). Amazon, Seattle’s largest employer, donated a record $1.5 million to back a slate of pro-business candidates in the November council elections – a campaign that was largely unsuccessful.

At least 9% of Amazon’s stock is owned by foreign investors, according to financial data provider Refinitiv.

A spokesman for Amazon, which has been butting heads with the city for two years over attempts to levy more taxes on the company, declined to comment.

“What they are proposing is likely an unconstitutional backdoor ban on U.S. companies speaking about local elections,” Jim Manley, an attorney with the conservative Pacific Legal Foundation, told Reuters.

The U.S. Supreme Court’s 2010 Citizens United ruling struck down limits on political contributions by corporations or unions. Companies and unions may not give money directly to campaigns but may spend unlimited amounts on ads and other means.

The legislation before the Seattle City Council says that companies that have at least 5% of their shares held by foreigners, or 1% by a single foreigner, are subject to foreign influence and therefore cannot participate in elections.

Amazon’s $1.5 million political donation for Seattle’s November elections represented more than half of the nearly $2.7 million raised by a Super Pac for those elections. Four years ago, Amazon donated $25,000.

Super Pacs may accept unlimited contributions from any non-foreign source.

Amazon began to prominently flex its political muscle in May 2018 when the Seattle council approved an employee “head tax” on the city’s largest companies, in order to combat a housing crisis. Just four weeks later, the City Council repealed the tax after a coalition of businesses, with Amazon at the forefront, mounted a well-financed campaign for a referendum to repeal the tax.

Socialist council member Kshama Sawant says she will restart the “Tax Amazon” campaign she led in 2018 with a rally at City Hall on Monday.

Seattle is not the first city to take aim at campaign spending. St. Petersburg, Florida, approved a similar ordinance on foreign-influenced corporations in 2017 that has not yet been challenged in court.

Reporting by Gregory Scruggs; additional reporting by Jeffrey Dastin in San Francisco; editing by Bill Tarrant and Leslie Adler

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Exclusive: FBI investigates Briton, others for Epstein links – sources


(Reuters) – The FBI is investigating British socialite Ghislaine Maxwell and several other people linked to U.S. financier Jeffrey Epstein, who killed himself while awaiting trial on sex trafficking charges, according to two law enforcement sources familiar with the investigation.

FILE PHOTO: U.S. financier Jeffrey Epstein appears in a photograph taken for the New York State Division of Criminal Justice Services’ sex offender registry March 28, 2017 and obtained by Reuters July 10, 2019. New York State Division of Criminal Justice Services/Handout via REUTERS.

They said a principal focus of the FBI’s investigation is Maxwell, a longtime associate of Epstein, and other “people who facilitated” Epstein’s allegedly illegal behavior.

Maxwell has not been accused of criminal wrongdoing. Her lawyers did not respond to a request for comment.

The FBI also is following up on many leads received from women who contacted a hotline the agency set up at its New York field office in the wake of Epstein’s arrest in July, the sources said.

One of the sources said the probe remains at an early stage.

The sources declined to give further details or identify the people they are looking at apart from Maxwell. However, they said the FBI has no current plans to interview Britain’s Prince Andrew, a friend of Epstein’s who stepped down from his public duties in November because of what he called his “ill-judged” association with the well-connected money manager.

A spokeswoman for the FBI declined to comment.

A representative for the British royal family said that whether the agency interviewed Andrew was “a matter for the FBI.”

Epstein’s suicide in August, at age 66, came a little over a month after he was arrested and charged with trafficking dozens of underage girls as young as 14 from at least 2002 to 2005. Prosecutors said he recruited girls to give him massages, which became sexual in nature.

He had pleaded not guilty.

Following Epstein’s arrest, the FBI urged anyone who had been victimized by Epstein or had additional information to call the agency’s hotline.

U.S. Attorney General William Barr vowed to carry on the case against anyone who was complicit with the financier.

“Any co-conspirators should not rest easy,” he said in August.

The sources said they had received numerous tips from the hotline, which they are looking into.

Virginia Giuffre, one of Epstein’s alleged victims, has said in a civil lawsuit that Maxwell recruited her into Epstein’s circle, where she claims Epstein forced her to have sex with him and friends including Andrew.

Maxwell has called Giuffre’s allegations lies. Giuffre in response filed a defamation suit against Maxwell in 2015.

Giuffre repeated the claims about the prince in a BBC interview that aired this month.

Andrew, 59, also categorically denies the accusations and has said he has no recollection of meeting Giuffre, who was previously named Virginia Roberts.

The two law enforcement sources said the FBI’s principal focus is on people who facilitated Epstein and that Andrew does not fit into that category. They did not rule out the possibility that the FBI would seek to interview Andrew at a later date.

Reporting By Mark Hosenball; Editing by Noeleen Walder and Alistair Bell

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California governor rejects PG&E bankruptcy reorganization plan


(Reuters) – California Governor Gavin Newsom on Friday rejected a bankruptcy reorganization plan submitted by PG&E Corp (PCG.N), the state’s largest investor-owned utility, saying its proposal fails to meet the requirements of a recently enacted wildfire law.

The decision by Newsom, sent to PG&E in a letter, complicates the company’s push to exit bankruptcy and provide billions of dollars to victims of devastating wildfires in 2017 and 2018 sparked by the utility’s power lines.

The embattled utility now has until Tuesday to further amend its plan to Newsom’s satisfaction, but his criticism of the reorganization package as it was presented by PG&E a day earlier was sweeping.

Newsom said the plan lacks “major changes in governance” and tougher safety enforcement mechanisms mandated under the state wildfire statute, known as Assembly Bill 1054, which was enacted in July.

The governor also said PG&E’s plan, including a proposed $13.5 billion settlement with victims of wildfires blamed on its power lines, would leave the company with a weakened capital structure and “limited ability to withstand future financial and operational headwinds.”

“In my judgment, the amended plan and the restructuring transactions do not result in a reorganized company positioned to provide safe, reliable and affordable service to its customers, as required by AB 1054,” Newsom wrote.

PG&E, in a statement after release of the governor’s letter, disputed Newsom’s findings that its reorganization plan fails to live up to the criteria of the wildfire law.

“We believe it does and is the best course forward for all stakeholders,” the company said. “We’ve welcomed feedback from all stakeholders throughout these proceedings and will continue to work diligently in the coming days to resolve any issues that may arise.”

State approval of reorganization plan is a necessary step before PG&E can submit the proposal for a vote by creditors and final approval from a bankruptcy judge in San Francisco.

FILE PHOTO: PG&E works on power lines to repair damage caused by the Camp Fire in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage/File Photo

PG&E filed for Chapter 11 bankruptcy protection in January citing projected civil liabilities in excess of $30 billion from wind-driven blazes in 2017 and 2018 sparked by its equipment. Those included a wildfire last year that killed 85 people and destroyed the town of Paradise, ranking as California’s deadliest wildfire on record.

BLACKOUTS FOR SAFETY

In recent months, PG&E resorted to widespread power shut-offs that left hundreds of thousands of its customers without electricity for days at a time during periods of extremely high winds and dry conditions.

But the blackouts enraged consumers, regulators and politicians, including Newsom, who accused PG&E of failing through greed and mismanagement to invest in proper maintenance and upgrades of its power system over the years.

PG&E has denied putting profits ahead of public safety but acknowledged it needed to do a better job of protecting the grid from fire hazards.

Newsom had floated the idea of a state takeover of the utility if it failed to satisfy his demands, and has insisted that whatever entity emerges from bankruptcy must be “completely transformed” and more accountable.

The governor’s finding that PG&E’s reorganization plan must comply with the new law, AB 1054, is a prerequisite for the utility’s proposed civil settlement with wildfire victims.

The law creates a wildfire liability fund that investor-owned utilities can access for wildfire claims, provided the utilities contribute toward the fund and make a combined $5 billion, five-year investment toward improvement in their electrical grids.

To participate in the fund, PG&E must exit bankruptcy by June 30, putting intense pressure on the utility to resolve its complicated Chapter 11 quickly.

FILE PHOTO: California governor Gavin Newsom speaks at a news conference in San Diego, California, U.S. October 9, 2019. REUTERS/ Mike Blake

Prior to its $13.5 billion deal with victims, the company recently reached an $11 billion settlement with insurance companies and a $1 billion settlement with local governments for fire losses.

Bondholders led by Elliott Management opposed the reorganization plan championed by PG&E. However, the $13.5 billion compensation package agreed to by the utility – more generous than expected – makes it much more difficult for bondholders to upend PG&E’s plans.

Reporting by Tom Hals in Wilmington, Delaware, and Steve Gorman in Culver City, Calif.; Editing by David Gregorio, Bill Tarrant and Sandra Maler

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Rattling Republicans, U.S. House committee delays impeachment vote to Friday


WASHINGTON (Reuters) – Democrats delayed an impeachment vote by a U.S. House Committee just before midnight, incensing Republicans and setting up a Friday showdown over President Donald Trump’s future.

The committee had been expected to approve two articles of impeachment late on Thursday, setting up a vote by the Democratic-controlled House next week that is expected to make Trump the third president in U.S. history to be impeached.

Instead, as the clock ticked toward midnight, Judiciary Committee Chairman Jerry Nadler sent lawmakers home for the night and said members would return to vote Friday at 10 a.m. ET (1500 GMT).

Asked why the votes did not occur late Thursday, House Judiciary Democrat Mary Gay Scanlon said “the American people deserve to see the vote.”

The scheduling appeared to have nothing to do with the substance of the impeachment fight nor was it a sign that Democrats lacked the needed votes. But it outraged Republican leaders, who said afterward many had been planning travel home on Friday and would now have to reset their schedules.

Doug Collins, the top Republican on the panel, appeared shocked by the announcement and immediately reacted with anger, saying the rescheduling was done so Democrats could hold their vote when more voters would be watching on television.

“This was the most bush league thing I have seen, forever,” Collins told reporters. “This committee is more concerned about getting on TV in the morning than it was finishing its job tonight and letting the members go home. Words cannot describe how inappropriate this was.”

Democrats had expected to wrap up the hearing early in the evening, but Republicans, led by Collins, proposed a series of amendments that had no hope of passage.

Republicans offered hours of remarks on their amendments, frequently repeating the same prepared commentary and often veering into other topics that ranged from natural gas drilling to the state of the economy.

The committee’s debate began Wednesday evening.

Much of the impeachment focus has been on a July 25 phone call in which Trump asked Ukrainian President Volodymyr Zelenskiy to investigate Democratic presidential candidate Joe Biden and his son Hunter, who was on the board of a Ukrainian gas company. That is the basis for a charge by Democrats that Trump abused power.

Trump has also instructed current and former members of his administration not to testify or produce documents, leading senior officials like Secretary of State Mike Pompeo to defy House subpoenas. Democrats say that behavior constitutes obstruction of Congress, forming the basis of the other impeachment charge.

Trump denies any wrongdoing and has condemned the impeachment inquiry as unfair. His Republican allies in Congress argue that there is no direct evidence of misconduct and that Democrats have conducted an improper process that did not give the president an opportunity to mount his own defense.

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If the House impeaches Trump, who is charged with abuse of power and obstruction of Congress, he would then go on trial in the Senate. The Republican-led chamber is unlikely to vote to find the president guilty and remove him from office.

Republicans on the committee said that there were no crimes alleged in the impeachment articles and that “abuse of power” had become a catch-all for Democratic complaints about Trump.

“This notion of abuse of power is the lowest of low-energy impeachment theories,” said Republican Representative Matt Gaetz.

Reporting by David Morgan and Ginger Gibson; Additional reporting by Susan Cornwell; Editing by Peter Cooney and Gerry Doyle

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Church nativity scene depicts Holy Family as caged refugees


CLAREMONT, Calif. (Reuters) – A Methodist church in Southern California has turned a classic Christmas tradition – the Nativity scene depicting the birth of Jesus – into a statement about immigration by putting the Holy Family in cages.

A sculpture of Mary, depicted as a refugee in a cage, forms part of a Nativity scene at Claremont United Methodist Church in Claremont, California, U.S. December 9, 2019. REUTERS/Kyle Grillot

The United Methodist Church in Claremont, about 30 miles east of Los Angeles, built the display last weekend to draw attention to the plight of migrants and refugees in the United States.

“We don’t see this as political at all, we see this as theological,” said the church’s pastor, Reverend Karen Clark Ristine. “We know that this infant baby Jesus … grew up to be a Christ who calls us to compassion for our neighbor, compassion for one another.”The Nativity display, which was installed Sunday night, shows the Holy family separated in their own cages each topped with barbed wire. The baby Jesus is wrapped in silver Mylar, similar to ones given to migrants at detention centers to use as blankets.

While the church makes no mention of Trump administration policies, some visitors saw it as a slam against the president.

“I think is disgusting. I think it’s political and this is aimed at Trump,” said Tony Papa, who came to the display. “If I were a member of this church, I’d drop out, I really would, it’s very disgusting.”

SANCTUARY STATUTESPresident Donald Trump has made cracking down on immigration a central issue of his 2020 re-election campaign. His administration has worked to restrict asylum access in the United States in an effort to curb the number of mostly Central American families arriving at the U.S.-Mexico border.

Trump and his top officials have argued that most migrants travel to the United States for economic reasons and lack valid claims to protection.

California, which shares a border with Mexico, has adopted “sanctuary” statutes that limit cooperation with federal immigration enforcement when it comes to rounding up and deporting undocumented immigrants.

Irene Reyes, a tourist from Arizona, stopped by the nativity scene and became emotional as she talked about its message.”That’s what’s actually happening,” she said about the migrant children detained in cages at detention centers along the border earlier this year. “And it’s like it was brought out to the world and then nothing happened.

“And if you think about it now during the holidays, that these kids, sorry, aren’t with their families and what are we going to do about it? … Like we see it and then we close our eyes to it and it’s not right,” Reyes said.

Reporting by Norma Galeana; writing by Bill Tarrant; Editing by Michael Perry

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FBI thinks Saudi shooter acted alone, Florida governor decries ‘deep-seated’ hatred


PENSACOLA, Fla. (Reuters) – Investigators believe a Saudi Air Force lieutenant acted alone when he killed three people and wounded eight at a U.S. Navy base in Pensacola, Florida, before being fatally shot by a deputy sheriff, the FBI said on Sunday.

But they have yet to determine a motive for the rampage, even though fellow Saudi students at the base who were close to the shooter are cooperating with investigators, said Rachel Rojas, special agent in charge of the FBI’s Jacksonville office and lead investigator on the case.

Rojas said the FBI was working, as it does in most mass shootings, on the presumption that it was an act of terrorism, but she stressed that was largely to allow investigators to use special tools afforded to them in terrorism cases.

“We are looking very hard at uncovering his motive and I would ask for patience so we can get this right,” she said, adding that 80 FBI special agents, 100 support staff and scores of other investigators from the Navy and multiple federal agencies were working the case.

The FBI identified the shooter as Second Lieutenant Mohammed Saeed Alshamrani, 21, and said he opened fire inside a classroom at the base early on Friday morning.

Rojas said the pistol he used – a Glock 9mm handgun that can be paired with a magazine holding 33 rounds – was legally purchased by the shooter somewhere in Florida. According to U.S. regulations, it is legal for a foreigner in the United States on a nonimmigrant visa to buy a gun if certain conditions are met – including if they simply have a hunting license.

Alshamrani was on the base as part of a U.S. Navy training program designed to foster links with foreign allies. He had started training in the United States in 2017 and had been in the Pensacola area for the past 18 months, authorities said.

His fellow Saudi students were speaking directly with American investigators and were restricted to the base on order of the Saudi military, Rojas said.

“I thank the kingdom for their pledge of full and complete cooperation,” she added.

U.S. President Donald Trump said on Saturday that King Salman and Crown Prince Mohammed bin Salman were “devastated” by what took place and pledged to help families of the victims.

But members of Congress representing Florida have blasted the U.S. government for not already labeling the shooting as a terrorist attack and have demanded more details about what the Saudi government is doing to help the investigation and prevent future violence by members of its military.

The attack comes as the Trump administration has maintained warm ties with Riyadh amid Saudi involvement in the war in Yemen, high tensions with Middle East rival Iran, and continued political fallout from the killing of Washington Post journalist Jamal Khashoggi last year at a Saudi consulate in Turkey.

Royal Saudi Air Force 2nd Lieutenant Mohammed Saeed Alshamrani, airman accused of killing three people at a U.S. Navy base in Pensacola, Florida, is seen in an undated military identification card photo released by the Federal Bureau of Investigation December 7, 2019. FBI/Handout via REUTERS.

A group that tracks online extremism has said Alshamrani appeared to have posted criticism of U.S. wars in predominantly Muslim countries and quoted slain al Qaeda leader Osama bin Laden on Twitter hours before the shooting spree.

In English, he also wrote that he hated the American people for “committing crimes not only against Muslims but also humanity,” and he criticized Washington’s support for Israel, according to analysis by the SITE Intelligence Group.

Reuters has not verified the authenticity of the account, @M&MD_SHAMRANI, which was suspended by Twitter on Friday.

Florida Governor Ron DeSantis, speaking at a Sunday afternoon press conference, answered “yes, yes” when asked if he considered the shooting an act of terrorism.

“There is a lot of frustration in our state over this,” DeSantis said. “You have foreign military personnel coming to our base. They should not be doing that if they hate our country.”

DeSantis said Alshamrani took advantage of a “federal loophole” to buy the gun he used, and he confirmed that the suspect, since arriving in the United States in 2017, made a return trip to Saudi Arabia and also recently visited New York. The governor declined to give further details.

“He had a deep-seated hatred for the United States,” DeSantis said. “For us to be bringing in these foreign nationals, you have to take precautions. Bringing in people from Saudi Arabia – we need to be on guard against that.”

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Alshamrani was one of about 200 foreigners at the Pensacola base and thousands around the United States who participate in military training, a program that U.S. Defense Secretary Mark Esper said was “very important to our national security.”

Esper told “Fox News Sunday” that he had asked top defense officials to make sure all necessary precautions were taken to ensure safety at military installations, and that he asked the Pentagon to review screening procedures for military personnel from other countries coming to the United States for training.

Those personnel were already screened by the departments of State, Defense and Homeland Security, Esper said.

Reporting by Brad Brooks; Writing by Daniel Trotta; Editing by Daniel Wallis

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Prosecutors seek to up Harvey Weinstein’s bail, citing violations


NEW YORK (Reuters) – Hollywood producer Harvey Weinstein has at times failed to wear a required electronic tracking device, New York prosecutors said Friday, asking a judge to increase his bail to $5 million, from $1 million, as he awaits trial on sexual assault charges.

Assistant District Attorney Joan Illuzzi made the request at a hearing before Justice James Burke in Manhattan state court. She said Weinstein had failed to wear an electronic transmitter that works in tandem with his ankle bracelet on “numerous” occasions.

“It is the people’s position that none of those ‘bracelet gone’ violations were accidental,” she said.

Weinstein’s lawyer, Donna Rotunno, said the violations were a “technical” problem and that her client had never tried to flee, arguing that there was no need to increase his bail. She noted that he had always appeared on time for every court date.

Burke did not make a decision, but scheduled another hearing on the issue for next Wednesday.

Weinstein, 67, has pleaded not guilty to charges that he sexually assaulted two women, one in 2006 and another in 2013. His trial is scheduled to begin on Jan. 6, 2020.

Weinstein has been accused of sexual misconduct dating back decades by more than 70 women. He has denied the allegations, saying any sexual encounters were consensual.

The accusations against Weinstein helped spark the #MeToo movement in late 2017, in which hundreds of women have claimed sexual misconduct by powerful men in entertainment, business, media, politics and other fields.

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In addition to the two main accusers in the case, prosecutors have said they intend to call other women to testify at trial in order to establish a pattern of behavior.

Weinstein has sought to block some of that testimony. Burke has not ruled on the issue.

Weinstein could face a life sentence if found guilty. Burke last week denied Weinstein’s bid to dismiss some of the charges.

Reporting by Brendan Pierson in New York; Editing by Noeleen Walder and Richard Chang

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Special Report: 2020 U.S. census plagued by hacking threats, cost overruns


(Reuters) – In 2016, the U.S. Census Bureau faced a pivotal choice in its plan to digitize the nation’s once-a-decade population count: build a system for collecting and processing data in-house, or buy one from an outside contractor.

FILE PHOTO: An informational pamphlet is displayed at an event for community activists and local government leaders to mark the one-year-out launch of the 2020 Census efforts in Boston, Massachusetts, U.S., April 1, 2019. REUTERS/Brian Snyder/File Photo

The bureau chose Pegasystems Inc, reasoning that outsourcing would be cheaper and more effective.

Three years later, the project faces serious reliability and security problems, according to Reuters interviews with six technology professionals currently or formerly involved in the census digitization effort. And its projected cost has doubled to $167 million — about $40 million more than the bureau’s 2016 cost projection for building the site in-house.

The Pega-built website was hacked from IP addresses in Russia during 2018 testing of census systems, according to two security sources with direct knowledge of the incident. One of the sources said an intruder bypassed a “firewall” and accessed parts of the system that should have been restricted to census developers.

“He got into the network,” one of the sources said. “He got into where the public is not supposed to go.”

In a separate incident during the same test, an IP address affiliated with the census site experienced a domain name service attack, causing a sharp increase in traffic, according to one of the two sources and a third source with direct knowledge of the incident.

Neither incident resulted in system damage or stolen data, the sources said. But both raised alarms among census security staff about the ability of the bureau and its outside security contractor, T-Rex Solutions, to defend the system against more sophisticated cyberattacks, according to five sources who worked on census security, as well as internal messages from security officials that were reviewed by Reuters.

Among the messages, posted on an internal security registry seen by Reuters, was a note observing that T-Rex’s staff lacked adequate forensic capability as recently as June of this year. “In the event of a real-world event such as a significant malware infection,” the team would be “severely limited in its capability to definitively tell the story of what occurred,” the message said.

One of the sources with direct knowledge of the hack involving Russian IP addresses described the internal Census Bureau reaction as a “panic.” The incidents prompted multiple meetings to address security concerns, said the two sources and a third census security source.

Census Bureau spokesman Michael Cook declined to comment on the incidents described to Reuters by census security sources. He said no data was stolen during the 2018 system test and that the bureau’s systems worked as designed.

The work of Pega and T-Rex is part of the bureau’s $5 billion push to modernize the census and move it online for the first time. The project involves scores of technology contractors building dozens of systems for collecting, processing and storing data and training census workers for the once-a-decade count. T-Rex’s security work is projected to cost taxpayers up to $1.4 billion, according to the census budget, making it the largest recipient of the more than $3.1 billion that the bureau set aside for contracts.

The problems with Pega and T-Rex reflect the Census Bureau’s broader struggle to execute the digitization project. The effort has been marred by security mishaps, missed deadlines and cost overruns, according to Reuters interviews over the past several months with more than 30 people involved in the effort.

“The IT is really in jeopardy,” said Kane Baccigalupi, a private security consultant who previously worked on the census project for two years as a member of the federal digital services agency 18F, part of the General Services Administration. “They’ve gone with a really expensive solution that isn’t going to work.”

The potential costs of a hacking incident or a system failure go beyond busted budgets or stolen data. A technological breakdown could compromise the accuracy of the census, which has been a linchpin of American democracy since the founding of the republic more than two centuries ago.

The U.S. Constitution requires a decennial census to determine each state’s representation in Congress and to guide the allocation of as much as $1.5 trillion a year in federal funds. Census data is also crucial to a broad array of research conducted by government agencies, academics and businesses, which rely on accurate demographic statistics to craft marketing plans and choose locations for factories or stores.

In a worst-case scenario, according to security experts, poorly secured data could be accessed by hackers looking to manipulate demographic figures for political purposes. For example, they could add or subtract Congressional seats allocated to states by altering their official population statistics.

The Census Bureau says its information-technology overhaul is on-track. Systems supporting initial census operations – such as creating its address database and hiring workers – are “fully integrated with one another, performance-tested, and deployed on schedule and within budget,” bureau spokesman Cook said.

Cook said that the bureau had conducted a “bug bounty,” a bulletproofing practice in which benevolent hackers are invited to search for vulnerabilities. He called the effort successful but declined to provide details for security reasons.

Lisa Pintchman, a spokeswoman for Cambridge, Massachusetts-based Pega, said the company was selected through a “very rigorous process” and stands by its work. T-Rex, headquartered in Maryland, declined to comment.

The escalating costs and reliability concerns for Pega’s front-end website have prompted the bureau to consider reverting to an in-house system, which remains under construction as a backup, according to three technology professionals involved in the census project. Census spokesman Cook confirmed that the in-house system, called Primus, would be available for use if needed next year.

This exclusive account of the Census Bureau’s technology troubles comes after government oversight agencies have chronicled other security problems, delays and cost overruns.

The Government Accountability Office (GAO), the fiscal watchdog for Congress, has said the 2020 census is at high risk for a breach or system outage that could prevent people from filling out surveys. The GAO has also said the bureau’s information technology systems won’t be fully tested before the census kicks off for almost all Americans on April 1, 2020, and that 15 of the bureau’s systems – including Pega’s data collection mechanism – were at risk of missing development deadlines ahead of the census.

The Inspector General of the Department of Commerce, meanwhile, in October announced plans to audit the bureau’s technology operations, months after identifying mismanagement of its cloud data-storage system that left it vulnerable to hackers.

Cook declined to comment on the audit but said the bureau is poised to “conduct the most automated, modern, and dynamic decennial census in history.”

The effort to move the census online aims to streamline the counting process, improve accuracy, and rein in cost increases as the population rises and survey response rates decline. Adjusting for 2020 dollars, the 1970 census cost $1.1 billion, a figure that rose steadily to $12.3 billion by 2010, the most recent count. The 2020 tally is projected at $15.6 billion, including a $1.5 billion allowance for cost overruns.

The bureau’s technology woes mounted outside the limelight, as Washington focused on the Trump administration’s push to add a question asking census respondents if they were U.S. citizens, part of a larger effort to curb illegal immigration.

The president abandoned that effort in July after the U.S. Supreme Court rejected it, cheering civil rights groups who had worried it would dissuade immigrants from responding and cost their communities political representation and federal dollars. Still, an October 18 study by the nonpartisan Pew Research Center found that more than one-fifth of Hispanics say they may not participate in next year’s census, compared to 12% of whites.

‘SINGLE POINT OF FAILURE’

The census technology overhaul got off to a late start, in part because Congress gave the bureau less funding than it requested for most of the decade. Pressed for time, bureau leadership at times prioritized speed over security, according to four people familiar with the bureau’s security operations.

New technology systems, they said, were tested in settings that were vulnerable to hackers despite carrying unresolved risks that had been identified by the bureau’s in-house security team. The testing was authorized by bureau leadership and supported by T-Rex, over the objections of the in-house security officials, who wanted the vulnerabilities fixed first, three of the people said. It stoked internal tensions that ultimately led one security boss to quit his post, the people said.

The Census Bureau’s Cook declined to comment on whether the testing was done over the objections of in-house security officials but said that the bureau follows a strict protocol to minimize risk.

The bureau began rolling out its technology plans in 2014, promising a technological tour-de-force with 52 separate systems. Twenty-seven of them will be used for collecting census data, which include building the website where respondents submit forms and the tools used by door-knockers tasked with nudging stragglers.

Most of the Census Bureau’s $5 billion in technology spending has gone to seven main contractors, who together have tapped another 41 companies as subcontractors, according to public presentations by the Census Bureau in 2018.

Within months of the rollout, government advisors from two outside agencies – the U.S. Digital Service and 18F – began warning officials off the sprawling approach, according to Baccigalupi and five other people familiar with the discussions. The outside advisers urged a simpler system, one that would be easier to defend against hacks and glitches.

The Digital Service was created in 2014 by President Barack Obama after the troubled launch of Healthcare.gov, the website meant to allow Americans to sign up for health insurance under Obamacare. Design flaws left the site overwhelmed by higher-than-expected traffic and prevented many users from registering for weeks. Digital Service officials saw the 2020 census as a potential repeat of that fiasco, two of the people said.

The General Service Administration’s 18F unit – named for the address of its Washington, D.C. office – functions like a private-sector consultant and is paid by agencies seeking technology help.

18F declined to comment for this story, and the Digital Service did not respond to requests for comment.

The debate between Census Bureau leadership and its advisors from the Digital Service and 18F focused on two broad approaches to software production: monolithic versus modular.

A monolithic framework – like the one envisioned by Census Bureau officials – bundles different functions into one system. In the case of the census, that could mean a system that allows people to answer the survey on a website, translates incoming responses into data and stores it. Monolithic systems can be easier to build, but critics say they become hopelessly complex when something goes wrong. A problem with one function can shutdown the whole process.

“It’s a single point of failure,” Baccigalupi said.

In a modular system, by contrast, engineers build different pieces of software for each function, then write code to allow them to interact. While it’s more challenging to move data through different components, the risk of a system collapse is much smaller. If one function breaks, others can still work while it’s repaired.

Census officials brought in 18F and Digital Service consultants on long-term secondments to help with aspects of the project but largely ignored their recommendations to take a more modular approach, said 18F’s Baccigalupi and Marianne Bellotti, a former agent at the Digital Service who consulted on the project in 2017.

“I told them pretty consistently in 2017: If you suffer a denial-of-service attack, I’m not sure your architecture can withstand it,” Bellotti said.

In a denial-of-service attack, a hacker tries to prevent legitimate users from accessing a program, often by overwhelming it with more connection requests than it can process. Any extended outages during the census would reduce response rates, compromising the accuracy of the data and making it more expensive to collect.

Cook, the Census spokesman, did not comment on why the bureau chose a more monolithic approach but said the consultants recommending against that path did not fully understand its systems.

“18F and USDS looked at portions of our systems and provided recommendations, but neither group had an overall understanding of how those systems integrated or their capabilities,” Cook said.

RISING COSTS

Bellotti and Baccigalupi say they told the bureau repeatedly in 2016 and 2017 that Pega’s technology wasn’t well-suited to its central tasks – building the self-response website and the mobile applications to be used by census door-knockers. Pega’s code, they argued, would require so much customization that the final product would be slow and prone to glitches.

“If you want to build the fastest car in the world, you build that car from scratch,” Baccigalupi said. “You don’t try to customize a tour bus until it’s the fastest car in the world.”

The Census Bureau’s outside advisers from Carnegie Mellon University’s Software Engineering Institute shared the concern and told the bureau in a 2016 memo, which was reviewed by Reuters, that commercial products such as Pega’s “are not designed to meet an organization’s specifications.”

Neither the bureau nor Pega commented on the assertion that the need for customization made the system expensive and unreliable.

Before hiring Pega, the bureau already had a workable system for data collection, built by in-house staff, Baccigalupi said. Starting in 2014, small teams had fashioned prototypes for online responses and mobile apps that seemed to work. The online response prototype, known as Primus, had been built at little cost beyond the salaries of the half-dozen or so coders.

The in-house systems were tested, and Primus was used in a real-world setting during smaller surveys conducted by the bureau. All performed well, John Thompson, who served as Census Bureau director from 2013 to 2017, said in an interview.

In a 2016 public report explaining its choice to go with an outside contractor, the bureau called Pega’s product a “commercial off-the-shelf solution” that could work with minimal alterations. Pega would do what Primus and the in-house mobile apps could do, but cheaper, with an estimated price tag of $84.5 million, compared to the $127 million forecast for building in-house. Pega would also supply other key functions, such as transferring user responses to data storage.

The reality was messier. Pega’s off-the-shelf solution has required so much modification that it has become “unrecognizable,” said one former Census Bureau official involved in the contracting process. In January 2018, the bureau nearly doubled Pega’s cost estimate to $167.3 million. It has spent about $149 million so far.

Contract documents reviewed by Reuters showed about $121 million of Pega’s contract has gone toward “contracting services,” a category that two former bureau contracting officials said typically refers to the labor required to write and customize code. The figure is more than 13 times Pega’s initial estimate for contracting services.

The bureau did not comment on the escalating costs. Pintchman, the Pega spokeswoman, said the work is “on budget” and that “any changes in estimates would be a result of changes in project scope as well as the Census Bureau identifying additional opportunities for us to add value.”

Thompson, who ran the bureau at the time it decided on Pega, described the decision as a “tough call.” While Thompson and his team viewed Primus as capable of scaling up for the 2020 Census, he said the prospects for scaling up the in-house prototypes for census-worker mobile apps were less certain.

As Pega’s problems have become more clear, Census officials have considered reverting to Primus, the in-house system, for data collection, said three sources familiar with the bureau’s thinking. As recently as this summer, they were instructing employees “to build Primus out, in case it was needed,” said one of those people.

SECURITY INCIDENTS

The only full-scale test of the system took place in Providence, Rhode Island, last year. The bureau conducted a kind of dress rehearsal – essentially a mini-census, with respondent data collected and stored online.

That’s when the system was accessed from IP addresses in Russia, the two census security sources said. Other hackers launched a domain name system attack on the website, which one source described as similar to a denial-of-service attack.

The domain name system attack was not as worrisome as what it revealed about the abilities of T-Rex to respond to such a threat, according to five people involved in census security.

T-Rex staffers “didn’t know how to access the cybersecurity defense tools that were in place, and they didn’t know what to look for,” said a person familiar with the operation. This source added that the bureau had purchased a license to use forensic-analysis software, called EnCase, to investigate hacks more than a year earlier, but T-Rex had yet to fully integrate EnCase into the security system when the security incidents occurred.

T-Rex’s security work had encountered trouble early on. The GAO reported that, by June of 2018, Census’ Office of Information Security (OIS) had flagged more than 3,000 security compliance deficiencies, 2,700 of which were related to components being developed by T-Rex.

OIS voiced concern over the flags and recommended addressing the bulk of them before testing, according to two security officials familiar with the matter. But bureau leadership authorized live-testing of the systems anyway to keep the project on schedule, the people said. The bureau’s Office of Information Security chief, Jeff Jackson, quit his post in October out of frustration over his office’s lack of influence on the project, two sources familiar with the matter said. Jackson did not respond to requests for comment.

A June report by the Department of Commerce’s Office of Inspector General called attention to other snafus. It revealed that, for a prolonged stretch in 2018, the bureau lost the codes needed to gain unrestricted access to its Amazon-based cloud data-storage system. Without the codes, the IG reported, the bureau could not have stopped a hacker from accessing or destroying data stored in the cloud.

Slideshow (4 Images)

The IG, in an October 17 letter to Census Director Steven Dillingham, said it would “immediately” begin auditing the bureau’s technology to “determine the effectiveness of security measures.”

Baccigalupi, the former 18F consultant, called the project’s problems to date “infuriating” given the high cost to taxpayers, and said the bureau’s internal staff could have built the systems better and cheaper.

“Those teams are eager to do it,” Baccigalupi said, “and demoralized to see bad and expensive software going out instead.”

Reporting by Nick Brown; Editing by Richard Valdmanis and Brian Thevenot

Our Standards:The Thomson Reuters Trust Principles.



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U.S. snowstorms turn Thanksgiving holiday travel into a nightmare


FILE PHOTO: A line of jets wait to takeoff after a pre-Thanksgiving holiday snowstorm caused more than 460 flight cancellations at Denver International Airport, Colorado, U.S., November 26, 2019. REUTERS/Bob Strong/File Photo

NEW YORK (Reuters) – Heavy snows in the United States closed roads and canceled nearly 900 flights on what was forecast to be the busiest day of the year for highways and airports, stranding hordes of travelers trying to head home on Sunday after the Thanksgiving holiday.

The storm was expected to dump 12 inches (30.48 cm) of snow on the western part of the Boston metro area by Monday morning, according to the National Weather Service.

Heavy snow and freezing rain was forecast overnight across a vast area stretching from the Great Lakes across the Northeast. Blizzards pounded the Great Plains and upper Midwest all day Sunday and heavy rains hit the West Coast.

Flight cancellations and delays mounted through the day, most in airports in San Francisco, Newark, and Boston. At 10:30 p.m. Eastern time, 881 flights were canceled and 7,122 delayed, according to FlightAware.com.

Airlines for America, an industry trade organization, forecast that a record 3.1 million passengers would fly on Sunday, which it said would be the busiest day ever. The Sunday after Thanksgiving is also the busiest day of the year for roadways, according to the American Automobile Association.

All told, some 55 million people tried to take to the air roads, rails and waterways to make it home from their holiday feast.

“This has been a really long-lived and intense storm that effected the entire nation for the past five or six days,” said Patrick Burke, a meteorologist with the National Weather Service’s Weather Prediction Center. “It’s reforming and taking aim directly at the Northeast.”

Burke said that even a slight shift in the forecasted path of the East Coast storm in the coming hours could mean far more snow for major cities, including Boston, Philadelphia and New York.

(The story corrects number of flights canceled in first paragraph; Adds exact number of flights canceled and delayed in fourth paragraph)

Reporting by Barbara Goldberg in New York and Brad Brooks in Austin, Texas; Editing by Nick Zieminski and Alistair Bell

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Factbox: Quotes from shoppers as they scour for the best deals on Black Friday


NEW YORK (Reuters) – Shoppers headed out to stores across the United States in a quest to score the best Black Friday discounts on everything from handbags to 4K TVs, with early promotions marking the start of a condensed holiday shopping season.

People wait in line to pay for purchases at Best Buy during a sales event on Thanksgiving day in Westbury, New York, U.S., November 28, 2019. REUTERS/Shannon Stapleton

The following are quotes from shoppers and store managers in the midst of America’s biggest shopping day:

DICK DOYLE, 76, RETIRED, SHOPPING AT MODELL’S SPORTING GOODS IN VIRGINIA:

“I will come to the mall, look at prices and go back and check them online. Prices and discounts online are competitive to what’s available in stores.”

MARIAH BERRY, 22, UNIQLO TRAINEE SUPERVISOR, CHICAGO

“We tend to have more deals in-store, so people come in rather than go online … The only problem today is we didn’t expect how slow it would be. It’s the same with Macy’s and all the others, but that’s been surprising.”

ANTHONY WRIGHT JR, 26, ENGINEERING PHD STUDENT, SHOPPING AT BEST BUY (BBY.N) IN CHICAGO:

“We literally drove by at 2 o’clock after looking at YouTube videos of people sleeping outside. There weren’t really a lot of people so we went back home and came back around six.”

EVAN HOUSER, 22, ELECTRONICS SALESMAN AT TARGET (TGT.N) IN DOWNTOWN CHICAGO:

“It’s slow now because we had a big, big rush last night – we had a line around the block from like 4:30.”

SERGE MENENG, 48, ENGINEER, SHOPPING AT COSTCO (COST.O) IN VIRGINIA:

“I came in to Costco this morning, hoping to get a good deal on a Canon camera I have been wanting to buy and I checked the price online versus in-store and it was better here.”

MONYETTA MONK, 30, WORKS IN EMERGENCY AT A HOSPITAL, SHOPPING AT TARGET (TGT.N) IN VIRGINIA:

“We are doing some Christmas shopping and for some birthdays between now and the end of the year. We came out this morning for a popular LOL toy and were able to save $30. Target is very competitive when it comes toys.”

Reporting by Melissa Fares, Andrew Kelly and Shannon Stapleton in New York, Lisa Baertlein in Los Angeles, Richa Naidu in Chicago and Nandita Bose in Washington; Additional reporting by Uday Sampath in Bengaluru; Editing by Nick Zieminski, Saumyadeb Chakrabarty and Maju Samuel

Our Standards:The Thomson Reuters Trust Principles.



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