Ex-Industry Lobbyists Win Top Jobs in Agencies They Once Fought – By Jennifer A Dlouhy & Jesse Hamilton (Bloomberg.com) / Dec 21 2017
When Cadiz Inc. wanted to build a 43-mile pipeline to pump water from a Mojave Desert aquifer to thirsty Southern California, it enlisted an army of lobbyists, lawyers and consultants to secure the federal government’s sign-off.
The Obama administration blocked it anyway.
But the project’s fortunes changed after the election of Donald Trump — and his appointment of David Bernhardt, one of Cadiz’s former lawyers, to be second-in-command of the Interior Department.
Within months, the department had reversed course and told the Los Angeles developer it didn’t need the federal government’s permission after all.
In his first year as president, Trump studded his cabinet with people who previously fought to undermine what some see as the traditional missions of the agencies they now lead. EPA Administrator Scott Pruitt, for example, built his political career suing the agency and challenging what he termed its “activist agenda.” Education Secretary Betsy DeVos has called public schools a “dead end.” And Ben Carson, the secretary of Housing and Urban Development, downplayed proposals to cut housing aid.
Less well known — and potentially more impactful — are the former industry advocates who are now shaping policy behind the scenes in lower levels of the federal government.
Trump has placed them in regulatory roles across the bureaucracy, often in charge of the very same policies they sought to influence for previous clients and employers, according to a review by Bloomberg News. There’s a former mining executive in charge of mine safety, a chemical industry representative writing chemical safety rules and a career banker whose prior company was sanctioned by the agency he has now taken over: the Office of the Comptroller of the Currency.
Trump supporters say past Democratic presidents recruited government appointees from advocacy groups and think tanks who were equally invested in matters of policy. The pro-business worldview of Republicans just means GOP presidents are more likely to appoint people who have deep government knowledge from serving as lobbyists, lawyers and executives.
“You certainly wouldn’t want your airplane pilot to not know what he is doing, and you’d rather not have your doctor just come in off the street,” said Mike McKenna, a Virginia-based Republican energy consultant who helped guide Trump’s presidential transition. “Do you want a government run by people who know what the hell they’re doing, or are you OK with it being run by a bunch of amateurs?”
The hiring of ex-lobbyists has been made easier because Trump scrapped an Obama-era requirement that they wait for two years before joining agencies they tried to influence. A revised ethics policy, issued in January, merely requires appointees to recuse themselves from matters involving former employers and clients for two years.
Even that requirement can be waived where the need for an appointee’s expertise is deemed to outweigh conflict-of-interest concerns.
Bernhardt says he didn’t participate in the Cadiz decision, won’t benefit financially from the policy reversal and is recused from particular matters involving specific people or companies he represented in private practice.
Obama’s Interior Department blocked the Cadiz project, saying the pipeline couldn’t be built in a railroad’s right-of-way on federal land because it wasn’t originally needed by that railroad.
It had plenty of supporters, including Interior Secretary Ryan Zinke, who backed the project as a congressman, Bernhardt said.
“I’ve not been involved at all in any decision by the department on it,” he said in an interview.
Still, Bernhardt’s former law firm, Brownstein Hyatt Farber Schreck, stands to earn millions of dollars if the Cadiz pipeline gets built, according to filings with the U.S. Securities and Exchange Commission. Bernhardt said he has no ongoing stake in the project.
Bernhardt’s client list from his time as a lobbyist and lawyer is packed with companies that have business before the Interior Department: affiliates of Noble Energy Company LLC, a major Gulf of Mexico oil producer; subsidiaries of Statoil AS, the Norwegian company that wants to build a wind farm off the New York coast; and a unit of Halliburton Co., the world’s largest fracking services provider.
Now that Bernhardt is back at the Interior Department — he worked there previously in the administration of President George W. Bush — the agency’s request forms for meetings with him specifically outline his commitment “to avoid even the potential appearance of a lack of impartiality” by not personally participating in any particular matters that involve his former clients or current clients of his old law firm.
Bernhardt has developed a scrupulous process — he says it is “vital” — to keep him walled off from potential conflicts forbidden under his ethics agreement. He issued a memo to staff listing specific companies and the type of issues that are off limits, with a level of detail surpassing that of a similar missive from a predecessor in the Obama administration.
“Morality in this sphere is based upon the rules and laws put in place,” Bernhardt said. “I am not here to act in a way that benefits me financially.”
He carries a 4-inch-by-3-inch card that lists the companies he must avoid, to help him — and anyone showing up at Interior — navigate the ethical thicket.
Not on the card: former Bernhardt client Safari Club International Foundation, the charitable arm of Safari Club International, a hunting advocacy group. The club was elated when Bernhardt was confirmed, describing him in blog post as “an avid hunter, angler and shooter” who will help Trump “wisely manage the Interior Department’s resources.”
In November, the Interior Department’s Fish and Wildlife Service sided with the group and decided to allow big-game hunters to bring elephant carcasses from Zimbabwe into the U.S., reversing a 2014 ban.
After a public outcry, Trump put the new import plan on hold, but the new policy hasn’t been formally revoked or revised.
Bernhardt is not barred from matters of general applicability involving Safari Club International or its foundation — a category that includes broad regulations and policy moves.
“Mr. Bernhardt has worked on various matters regarding hunting including particular matters of general applicability related to elephants, which is entirely appropriate given his ethics agreement and the guidance he has received from ethics experts,” Interior spokesman Russell Newell said.
Even with all the precautions, the collision of Bernhardt’s past work with current Interior Department policy decisions hands fodder to critics, while threatening to undermine the integrity of those moves. Bernhardt’s very presence at Interior has cast suspicion over the Cadiz about-face.
“Only someone with a vested interest and intimate working knowledge of the agency could have engineered the quick reversal of a fairly arcane policy,” said Kate Kelly, public lands director at the liberal Center for American Progress. “Bernhardt had both.”
Similar scenarios are playing out across the federal government.
At the Energy Department, Sean Cunningham, a former utility lobbyist, is now a vocal champion of the Trump administration’s plan to help keep coal plants online by allowing them to charge more for the power they produce. One of his former clients — FirstEnergy Corp. — is poised to be a major beneficiary.
Cunningham lobbied on behalf of power companies for more than a decade, including challenging proposals that would advantage renewable power, potentially at the expense of coal plants. Asked about conflicts, an agency spokeswoman said Cunningham’s role as a registered lobbyist for FirstEnergy ended in 2008, well outside the two-year recusal window.
Cunningham kept advocating for other industry clients through at least 2013. Those include Southern Company Services Inc., Duke Energy and American Electric Power Co., according to lobbying disclosures.
He has taken a pro-coal message into his new job as the head of the Office of Energy Policy and Systems Analysis. Coal and nuclear power should be “revived, not reviled, in America,” Cunningham told a conference of state electric regulators Nov. 13.
At the Agriculture Department, a former pesticide industry lobbyist has been helping to map out a blueprint for cutting red tape, after spending seven years trying to influence pesticide policy as a lobbyist for CropLife America, the trade group representing Monsanto Co., Syngenta AG and other agrichemical manufacturers.
Rebeckah Adcock’s new role as the USDA’s regulatory reform officer was good news for the industry. Her background gives Adcock an “an exceptional understanding” of its needs, the Southern Crop Production Association said in a news release after meeting with her in May. A current CropLife lobbyist also sat in on that meeting, according to visitors logs first reported by the New York Times and ProPublica.
Adcock had signed an ethics agreement pledging to avoid CropLife and issues she’d worked on prior to joining the Agriculture Department. But meetings with former employers and clients don’t run afoul of federal ethics rules as long as they include five or more stakeholders — a threshold established in guidance issued in 2009 during the Obama administration.
The meeting “is not a violation of Ms. Adcock’s ethics agreement, ” said Agriculture Department spokesman Tim Murtaugh.
In June, CropLife criticized a proposed rule to regulate genetically modified organisms. In November, the USDA withdrew it.
The presence of former industry insiders is especially pronounced in the Environmental Protection Agency, where at least 10 top Trump appointees previously represented industries with business before the EPA.
“Even setting aside Scott Pruitt, there is a very long list of other folks that are former industry lobbyists and industry lawyers, and it’s not exactly draining the swamp,” said Erik Olson, director of the Natural Resources Defense Council’s health program. “It’s draining the swamp and finding all the swamp creatures that were there — and then hiring them.”
The former industry representatives include Erik Baptist, a senior deputy general counsel for the agency, who has gotten permission to deal with the U.S. biofuel mandate, despite his past work opposing renewable fuel quotas on behalf of the American Petroleum Institute.
In an interview, Baptist acknowledged his role but said his focus with API was on litigation not lobbying.
Similarly, Susan Bodine now leads the EPA’s enforcement and compliance office after spending years representing an industry targeted by it as a lobbyist for the American Forest and Paper Association. She said in an interview that her work for the paper association focused on regulation of non-hazardous materials and was more than two years ago — falling outside the recusal window.
Nancy Beck was installed as the deputy assistant administrator of the EPA’s chemical safety office, despite having previously pressed for less stringent requirements on behalf of the American Chemistry Council and its member companies, including Dow Chemical Co., DuPont Co. and Exxon Mobil Corp.
Since taking the EPA post, Beck has made things easier for industry by revising an Obama-era proposal for prioritizing and evaluating thousands of existing chemicals for their risks.
The Obama administration had proposed a rule for broadly assessing chemicals, including scrutinizing legacy uses that are outdated but whose effects persist in the environment, such as asbestos insulation still lurking inside schools and offices.
But the American Chemistry Council, with Beck still on board, pressed for risks to be evaluated more narrowly, focusing on current uses. Later, at the EPA, Beck guided an agency rewrite that mirrored the council’s view.
Beck said the change was necessary to focus on chemicals that are “in the flow of commerce” and to make the rule “more implementable and workable.”
Beck had permission to tackle chemical safety issues — and general matters involving the council — because she’s technically an “administratively determined” employee exempt from the Trump ethics pledge.
“I’ve never seen myself as an industry person, and I’ve never been a lobbyist,” Beck said in an interview. “I’m a scientist first — and the fact that I have experience working with a trade association and have an understanding of how industry works doesn’t make me any less of a scientist.”
Some Trump appointees now charged with protecting the public have actively worked to undermine safeguards or were employed by companies cited for violating them. Consider David Zatezalo, who was just confirmed as head of the Mine Safety and Health Administration after nearly a decade with Rhino Resources Partners LP, a Kentucky coal company twice rapped by that office for an alleged pattern of violations and fined for a fatal accident in 2011. The company didn’t respond to a request for comment.
At his Senate confirmation hearing, Zatezalo, a miner who rose to be chief executive officer of Rhino Resources, said local management “was not doing what they should have been doing.”
Zatezalo said he was “not proud” of the episode, but he “did not try to lawyer-up and stop anything from happening.”
“If you haven’t done your job, we should be big kids and deal with it as such,” he said.
Zatezalo has managed and operated 39 mines, a Labor Department spokesperson said, stressing that he will work to install a culture of safety at all mines.
Joseph Otting was chief executive officer of OneWest Bank Group when Treasury Secretary Steven Mnuchin was its chairman — and both were there when an agency that is now part of the Office of the Comptroller of the Currency accused it and other firms of foreclosure abuses in the years after the financial crisis.
Now Otting is the comptroller — a job that’s routinely occupied by industry veterans — and has emphasized how much he understands the regulatory burdens that bankers face.
Otting’s own experience with regulators reached a low point several years ago when he felt intense pressure to settle accusations of improper foreclosures at OneWest. He considered quitting his OneWest job instead of signing a settlement agreement in 2011, Otting said at a roundtable with reporters Wednesday. The memory of that moment will color how he approaches enforcement at his agency, Otting said, and he’ll make sure that bankers “are given the right to prove their innocence.”
Among his first actions at the comptroller’s office was to cancel a high-profile program that would have removed hundreds of examiners from resident offices inside the banks they are assigned to scrutinize. The program was meant to keep government officials from getting too cozy with the Wall Street bankers they oversee, but Otting said the approach was “not practical” and other safeguards already prevented such bias.
To supporters, Otting’s expertise makes him a perfect fit for the job.
“What the administration has done is to appoint some very highly successful people with a unique point of view to Washington,” said Tom Quaadman, an executive vice president with the U.S. Chamber of Commerce Center for Capital Markets Competitiveness. “That’s very helpful in the development of policy” since a government official with experience on the other side of regulation is more likely to understand the real-world impact of public policies, Quaadman said.
But experience and expertise don’t “cure fundamental conflicts,” said Amit Narang, a regulatory policy advocate at Public Citizen.
“You can claim these people have experience and expertise, but the public is losing faith in our government’s ability to protect the public and to act on behalf of the public and the public interest, rather than corporate special interest,” Narang said. “Even the appearance of corruption is deeply corrosive to faith in our government.”
