With Trump Appointees, a Raft of Potential Conflicts and 'No TRansparency
WASHINGTON — President Trump is populating the White House and federal agencies with former lobbyists, lawyers and consultants who in many cases are helping to craft new policies for the same industries in which they recently earned a paycheck.
The potential conflicts are arising across the executive branch, according to an analysis of recently released financial disclosures, lobbying records and interviews with current and former ethics officials by The New York Times in collaboration with ProPublica.
In at least two cases, the appointments may have already led to violations of the administration's own ethics rules. But evaluating if and when such violations have occurred has become almost impossible because the Trump administration is secretly issuing waivers to the rules.
One such case involves Michael Catanzaro, who serves as the top White House energy adviser. Until late last year, he was working as a lobbyist for major industry clients such as Devon Energy of Oklahoma, an oil and gas company, and Talen Energy of Pennsylvania, a coal-burning electric utility, as they fought Obama-era environmental regulations, including the landmark Clean Power Plan. Now, he is handling some of the same matters on behalf of the federal government.Another case involves Chad Wolf, who spent the past several years lobbying to secure funding for the Transportation Security Administration to spend hundreds of millions of dollars on a new carry-on luggage screening device. He is now chief of staff at that agency — at the same time as the device is being tested and evaluated for possible purchase by agency staff.
There are other examples. At the Labor Department, two officials joined the agency from the K Street lobbying corridor, leaving behind jobs where they fought some of the Obama administration's signature labor rules, including a policy requiring financial advisers to act in a client's best interest when providing retirement advice.
This revolving door of lobbyists and government officials is not new in Washington. Both parties make a habit of it.
But the Trump administration is more vulnerable to conflicts than the prior administration, particularly after the president eliminated an ethics provision that prohibits lobbyists from joining agencies they lobbied in the prior two years. The White House also announced on Friday that it would keep its visitors' logs secret, discontinuing the release of information on corporate executives, lobbyists and others who enter the complex, often to try to influence federal policy. The changes have drawn intense criticism from government ethics advocates across the city.
Mr. Trump's appointees are also far wealthier and have more complex financial holdings and private-sector ties than officials hired at the start of the Obama administration, according to an Office of Government Ethics analysisthat the White House has made public. This creates a greater chance that they might have conflicts related to investments or former clients, which could force them to sell off assets, recuse themselves or seek a waiver.
A White House spokeswoman, Sarah H. Sanders, declined repeated requests by The Times to speak with Stefan C. Passantino, the White House lawyer in charge of the ethics policy. Instead, the White House provided a written statement that did not address any of the specific questions about potential violations The Times had identified.
"The White House takes its ethics pledge and federal conflict of interest rules very seriously," the statement said. "The White House requires all of its employees to work closely with ethics counsel to ensure compliance and has aggressively required employees to recuse or divest where the law requires."
The Trump administration's overhaul of personnel lays the groundwork for sweeping policy changes. The president has vowed to unwind some of the Obama administration's signature regulatory initiatives, from Wall Street rules to environmental regulations, and he has installed a class of former corporate influencers to lead the push. Administration supporters argue that appointees with corporate ties can inject a new level of sophistication into the federal bureaucracy and help the economy grow. And efforts to trim regulations in some areas have attracted bipartisan support.
But in several cases, officials in the Trump administration now hold the exact jobs they targeted as lobbyists or lawyers in the past two years.
Trump White House officials had over 300 recent corporate clients and employers, including Apple, the giant hedge fund Citadel and the insurance titan Anthem, according to a Times analysis of financial disclosures. (The White House has released disclosures for only about half of its roughly 180 current senior political employees.) And there are more than 40 former lobbyists in the White House and the broader federal government.
Exceptions Made in Secret
Walter M. Shaub Jr. is director of the Office of Government Ethics, which advises federal agencies to help them and their employees — including the White House — comply with federal ethics laws, such as a prohibition on using a government post to personally profit.
He said that Mr. Trump's own ethics executive order in late January eliminated a requirement, first adopted by President Barack Obama, that executive branch appointees not accept jobs in agencies they recently lobbied. That weakened standards applying to approximately 4,000 executive branch hires.
Mr. Trump also made it easier for former lobbyists in the government to get waivers that would let them take up matters that could benefit former clients.
During the Obama administration, these waivers were given only under a narrow set of circumstances, and had to be filed and explained in an annual report for public inspection, Mr. Shaub said. The waivers were also previously posted on the Government Ethics website. None have been posted since Mr. Trump became president, as sharing them is no longer required.
"There's no transparency, and I have no idea how many waivers have been issued," Mr. Shaub said in an interview, adding that he could not comment on any individual matter until a complaint had been filed and investigated.
The granting of such waivers, he said, has become "a political decision, which means career government ethics officials should not get involved in waivers under the new executive order."
After recent negotiations, Mr. Shaub and the White House Counsel's Office did agree on how to define the requirements and scope of recusal obligations. A lobbyist, for example, who pushed the Obama administration to approve or block a particular provision in a proposed federal regulation affecting a specific industry — like coal or telecommunications — would be subject to a broad ban under this agreement. "She must recuse for two years from development and implementation of the entire regulation," the legal advisory said.
Rolling Back Clean Power
But some cases that The Times examined could be violating this requirement or working around it using waivers. Mr. Catanzaro was registered for Talen Energy on the Clean Power Plan in 2015, yet he has worked in recent months as a senior member of the White House's National Economic Council trying to roll back that rule, adopted by the Obama administration.
Mr. Catanzaro's former clients, such as Talen and Devon Energy, have an enormous amount at stake in the regulations the White House is preparing to reverse — with his help. Talen, for example, helps operate the Colstrip power plant in Montana, the second-largest coal-burning plant west of the Mississippi. Federal officials have estimated that the plant could face a $1.2 billion bill as it makes updates to meet the new environmental standards, assuming it is not just closed.
Three industry lobbyists interviewed by The Times said that they recently had confidential conversations with Mr. Catanzaro about some of the same regulatory matters on which he was lobbying the federal government. And Mr. Catanzaro gave a briefing to reporters in March at the White House in which he discussed energy topics at length, including the details related to the executive order Mr. Trump signed on March 28 to weaken the Clean Power Plan.
"It's certainly true that there a lot of different forces that conspire to affect the coal industry, the gas industry, a lot of industries," Mr. Catanzaro said at a White House briefing last month in which he spoke with the understanding that journalists would not identify him in their reports. (The Times independently confirmed that Mr. Catanzaro made these remarks.) "Certainly government policy has a role," he said. "So to the extent the president can have a beneficial effect on that policy, he's going to take it."
Mr. Catanzaro did not respond to emails and phone calls requesting comment. And White House officials would not say whether he had been granted a waiver allowing him to be involved in the same matter he handled as a lobbyist.
Same Desk, New Seat
Mr. Catanzaro is not the only senior adviser facing potential conflicts on the National Economic Council, the White House office, run by the former Goldman Sachs executive Gary D. Cohn, that helps steer the president's financial and economic policy. D. J. Gribbin, the council's infrastructure specialist, previously worked for Macquarie, a bank that specializes in infrastructure deals and that stands to gain from whatever infrastructure proposal the president gets Congress to fund.
Shahira Knight, on the council as well, is a special assistant to the president for tax and retirement policy. Her previous job also involved retirement policy — but as a lobbyist for Fidelity, one of the nation's largest fund managers and providers of retirement products.
At Fidelity, lobbying records show, she was registered to work on retirement issues, including the so-called fiduciary rule, which has broad support from consumer groups. It requires financial firms to act in a client's best interest when dispensing retirement advice. Fidelity has said it supports the "best interest" standard but, like other firms, has raised concerns that the rule will prevent investors from accessing products they currently rely on for retirement savings.
Ms. Knight directed some of her appeals to the National Economic Council, her current employer. White House visitor logs show she met with the person whose job she essentially holds now.
In February, Mr. Trump issued a memorandum directing the Labor Department to review whether the rule may "adversely affect" investors' ability to access financial advice — and if it does, it authorized the agency to rescind or revise the rule. The department recently delayed the compliance date of the rule by two months, less than the industry had hoped for.
The White House did not respond to a request for comment about Mr. Gribbin or Ms. Knight, so it is unclear whether they received waivers letting them work on these issues or recused themselves from issues affecting their former employers. But under Mr. Trump's executive order, Ms. Knight should probably be barred for two years from participating in decisions that would affect the fiduciary rule.
Where Lobbyists Go
The lobbyist loophole in Mr. Trump's executive order may have allowed the Labor Department to hire Geoffrey Burr as a special assistant. The department is familiar ground to Mr. Burr, who was a lobbyist for the Associated Builders and Contractors, which pressed the agency on its overtime pay rule, wage requirements for government contracts and an additional half-dozen or so other regulations. Under Mr. Obama's ethics order, Mr. Burr would probably not have been able to join the Labor Department.
Such potential conflicts are showing up across the federal government.
Executives at Analogic Corp. had tried to sell its carry-on baggage security equipment to the T.S.A. with Mr. Wolf's help when he was a lobbyist. They were pressing the agency to conduct formal tests of its computed tomography devices, known as CT scans, which are already used broadly in the medical field and on checked baggage. The company now wants the T.S.A. to use them in the nation's 2,400 airport checkpoint security lanes, a move that could be worth at least $500 million in equipment sales.
The tests are underway, and at one point during an interview with The Times, company executives said they had reached out to Mr. Wolf to discuss the matter after he joined the T.S.A., listing his name among a series of agency officials they had recently contacted. But when asked again about Mr. Wolf, they would not give details from the conversation, at one point contradicting themselves and saying they had not spoken with him. Then one of them, Mark Laustra, a vice president at Analogic who leads the company's efforts to sell the screening devices, said, "Our interaction with Chad since he joined T.S.A. has been next to nothing."
Mr. Wolf's Twitter account on Friday still identified him as a lobbyist and displayed posts from last year urging the T.S.A. to buy the devices. "Positive developments from TSA on upgrading checkpoint scanners," a post from July said. "CT tech is the future."
A T.S.A. spokesman agreed to arrange an interview with Mr. Wolf — who worked at the agency during the Bush administration before becoming a lobbyist — but canceled it when told about the topic in detail.
"I'm afraid Mr. Wolf isn't going to have any available time in his schedule today," said Mike England, the spokesman, who then declined several follow-up requests over a one-week period. He later added, in a statement, that Mr. Wolf's "duties have not required a waiver" of the ethics standards Mr. Trump adopted in January, although Mr. England would not discuss the matter further.
The Department of Health and Human Services has become another source of potential conflicts.
Lance Leggitt, who serves as chief of staff to Tom Price, the health and human services secretary, worked last year as a lobbyist for 10 different health care companies, including United States Medical Supply and Advanced Infusion Services. He focused largely on lobbying the agency related to Medicare billing rules, as well as rules for health care supplier accreditations, lobbying disclosure reports show. All these issues are routinely handled by the agency he helps oversee.
Dr. Scott Gottlieb, the nominee to lead the Food and Drug Administration, received more than $350,000 in payments in 2014 and 2015 from nearly a dozen different pharmaceutical companies, including Vertex Pharmaceuticals, whose two approved drugs are seen as breakthrough treatments for cystic fibrosis. (They carry list prices of more than $250,000 a year.) Dr. Gottlieb, who has never been registered as a lobbyist but has served as the director of eight pharmaceutical companies and one laboratory company, wrote in a letter that he was prepared to recuse himself as necessary to avoid any conflicts.
The Department of Health and Human Services did not respond to a request for a comment.
Danielle Brian, executive director of the Project on Government Oversight, said the sheer number of potential conflicts — which will require recusals, necessitate waivers or result in violations of the ethics rule — is disturbing, particularly given the secretive approach the administration is taking on the issue.
"This is not a matter of just checking a box — this is about protecting the integrity of the operation of federal government," Ms. Brian said. "But our worst fears are coming true: We know people coming in who have conflicts, and we cannot see what restrictions they are under, if any."
The result, she predicted, might serve no one particularly well. Even if the rules are enforced, so many senior officials will be required to recuse themselves that "they will have a hard time getting their job done."
By Eric Lipton, Ben Protess, and Andrew Lehren, NY Times. April 15, 2017. Sarah Cohen from The New York Times and Justin Elliott and Derek Kravitz from ProPublica contributed reporting.
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April 17, 2017
