By Amanda Becker
WASHINGTON (Reuters) - Labor Secretary nominee Thomas Perez fielded tough questions from Senate Republicans during a confirmation hearing on Thursday about his role in the Justice Department's decision not to pursue a false claims case against St. Paul, Minnesota.
Perez is currently the assistant attorney general for the Civil Rights Division at the Department of Justice.
Republican lawmakers have cited concerns about his tenure there, alleging in a report that Perez entered into a quid pro quo agreement with St. Paul, getting the city to withdraw a Supreme Court appeal in exchange for the Justice Department not filing unrelated false claims charges against the city.
Perez denies any quid pro quo. While he was involved in getting St. Paul to withdraw the Supreme Court case, he says other Justice Department lawyers made the decision not to sue St. Paul.
If confirmed, Perez, 51, would fill the Labor Department's top spot, which is vacant after Hilda Solis left in January.
The false claims issue stemmed from a complaint by a small-business owner in St. Paul alleging the city had improperly certified it was in compliance with federal law when it applied for millions of dollars in community development funds. The businessman took his claim to the U.S. Department of Housing and Urban Development and the Justice Department.
While the Republican report said staff lawyers believed the case strong, the Justice Department ultimately decided not to bring suit against the city.
In exchange, the Republicans alleged, the city agreed to drop its appeal in a 2011 case pending before the Supreme Court, Magner v. Gallagher, which applied the use of "disparate impact" to fair housing claims.
Disparate impact cases target seemingly neutral practices that have a discriminatory effect. Perez, as head of the Justice Department's Civil Rights Division, therefore had a stake in preserving its use in housing matters like subprime lending and mortgage abuses, lawmakers said.
The panel's top Republican, Lamar Alexander of Tennessee, accused Perez of "wheeling and dealing" by offering to ignore a whistleblower claim in exchange for bolstering the disparate impact theory.
"What you saw was a case" headed to the Supreme Court "that you feared might limit the disparate impact theory of law," Alexander said.
In response, Perez said, "Bad facts make bad law and I thought this case was a poor vehicle for the Supreme Court to address the broad issue and the viability of disparate impact theory."
DEMOCRATS SAY CHARGES POLITICALLY MOTIVATED
A separate memo about the congressional probe prepared by Democratic staff on the House Oversight and Government Reform and Judiciary committees said there was "overwhelming evidence" that Perez acted professionally and dismissed the Republican probe as a politically motivated campaign.
Democrats on the panel focused on Perez's character, ability to achieve bipartisan compromise and his record of creating jobs as secretary of the Maryland Department of Labor from 2007 to 2009.
"The Maryland Chamber of Commerce is recommending Tom to be the secretary of Labor," Maryland Democratic Senator Barbara Mikulski said. "He brings everybody to the table."
Perez pledged to improve the administration of the Labor Department's Job Corps program, which educates and trains youth, by making sure it was "firing on all cylinders."
Democratic senators also focused on Perez's personal story as the son of parents who fled an oppressive government in the Dominican Republic.
The Democratic-controlled committee is expected to vote next week.
But Republican Senator David Vitter has pledged to block Perez's nomination when it reaches the full Senate.
Vitter had requested information about the role Perez played in examining allegations of voter intimidation made to the Justice Department in 2008 against the New Black Panther Party.
"I'm still extremely suspicious of Thomas Perez's record and plan to demand a 60-vote threshold if his nomination comes to the full Senate," Vitter said.
(Editing by Fred Barbash and Peter Cooney)