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SWAMP LIFE

Swamp Things: More Than 50% of President Trump’s Nominees Have Ties to the Industries They’re Supposed to Regulate

The president has turned federal agencies over to the very CEOs, lobbyists, and lawyers whom they are supposed to regulate.

In August 2016, energy consultant Steven Gardner gave a presentation to the trade group Professional Engineers in Mining (PDF). In it, he hammered the Department of the Interior’s Office of Surface Mining Reclamation and Enforcement for what he said was a highly flawed regulatory process behind the office’s Stream Protection Rule, a regulation designed to prevent water pollution near coal production sites. Gardner’s firm, ECSI LLC, had been retained by a coal industry trade group “to conduct a comprehensive critical review of the proposed rule,” which it opposed.

Gardner ended his August 2016 presentation with a slide asking, “What’s next?” that featured a photo of Democratic presidential nominee Hillary Clinton. Contrary to the slide’s projection, Donald Trump prevailed and ended up signing legislation rolling back the Stream Protection Rule.

And last week, things came full circle when the president nominated Gardner to lead the Office of Surface Mining Reclamation and Enforcement, the very office he had vehemently criticized on behalf of a client in the coal industry.

Environmentalists were, naturally, outraged. The Sierra Club called the idea of Gardner running a government agency that oversees mining operations “akin to hiring a wolf to guard sheep.”

But while the choice of Gardner may have been galling to the group, it was in no way surprising. In fact, it is one of the more succinct illustrations of how government is being run in the age of Trump.

Nearly a year since he won election, the president has turned federal agencies over to the private industries that they regulate. And he has done so to a degree that ethics groups say they have never witnessed.

The Daily Beast examined 341 nominations the president has made to Senate-confirmed administration positions. Of those, more than half (179) have some notable conflict of interest, according to a comprehensive review of public records. One hundred and five nominees worked in the industries that they were being tasked with regulating; 63 lobbied for, were lawyers for, or otherwise represented industry members that they were being tasked with regulating; and 11 received payments or campaign donations from members of the industry that they were being tasked with regulating.

Of the 162 nominees who didn’t have an overt conflict, 19 had either given money to or been a surrogate for Trump’s campaign (many of them ending up in ambassadorships), while 24 were career appointments or reappointments.

Of the 179 nominations with a conflict, not all proved successful. Some nominees, like Gardner, await consideration. Others, such as fast food tycoon and one-time Labor secretary hopeful Andy Puzder, had their nominations withdrawn. But many have been confirmed by the Senate and sit in positions to influence a vast array of executive policy.

“The depth of the ties of the industry is pervasive,” said Craig Holman, government affairs lobbyist for the group Public Citizen. “With the Trump administration we are seeing complete regulatory capture and quite frankly it will be the defining feature of this administration.”

Asked about the administration’s routine appointments of individuals from industries they’re being tasked with regulating, White House spokeswoman Lindsay Walters told The Daily Beast that the administration has thoroughly followed through on President Trump’s promises to root out corruption and special interest influence in Washington.

“Following the President’s pledge to ‘drain the swamp,’ the Trump Administration has put in place historically strong lobbying restrictions for current and former Administration staff,” Walters said in an email. “Under the Trump administration, expenditures on lobbying have decreased, as firms stop finding it as profitable to try to buy influence and rig the game in their favor.”

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The Greatest Hits

While the Gardner nomination may personify regulatory capture under Trump, it is by no means the only or even the most remarkable instance of it within the current administration.

That honor probably goes to David Zatezalo, who was nominated to be the assistant secretary for mine safety and health at the Department of Labor. Until 2014, Zatezalo was the chief executive of Rhino Resources, a Kentucky coal company. In 2011, Rhino was faulted for the death of one of its miners, who was killed by falling rocks caused by inadequate support beams. In 2013, a subsidiary of the company was blamed for a similar accident that killed a machine operator. The agency that went after Rhino in both those instances was the Labor Department’s Mine Safety and Health Administration, the very agency Zatezalo is now in line to lead.

Though not as bold as Zatezalo’s, there are many other nominations that have shocked good government groups as particularly audacious.

Trump nominated Brendan Carr, a former telecom lawyer who represented, among others, AT&T and Verizon, to serve as a commissioner for the Federal Communications Commission, which oversees telecoms. He was confirmed.

Trump nominated Dana Baiocco, a lawyer who defended companies accused of selling unsafe products—like Mattel and Yamaha—to serve as a commissioner for the Consumer Product Safety Commission.

Trump nominated Michael Dourson, a prominent consultant for chemical manufactures, for the job of assistant administrator for chemical safety and pollution prevention at the EPA. Dourson hasn’t been confirmed yet. But he already appears to be working at the agency, much to the confusion of Senate Democrats. Dourson has deep ties to DuPont, whose products are believed to be in a massive West Virginia warehouse fire that could spark an investigation by the agency he may soon help run.

Trump nominated Carlos Muniz, a lawyer at the Florida AG’s office, to serve as general counsel at the Department of Energy. Among the cases Muniz has argued included one defending his office’s decision not to join a lawsuit against the non-university known as Trump University.

Trump nominated Jeffrey Rosen, a lobbyist for a major airline group, to be the deputy secretary at the Department of Transportation, which will likely seek to implement the president’s proposal to privatize air traffic control. He was confirmed.

Trump nominated Paul Dabbar to be the Energy Department’s new chief scientist. Dabbar previously served as the “Head of Energy Mergers & Acquisitions at J.P. Morgan,” which he touted during his confirmation hearing. “I had the opportunity to lead energy sector investments and transactions in all 50 states and around the world,” he exclaimed.

Trump nominated David Malpass to be the undersecretary for international affairs at the Department of Treasury. In 2007, Malpass was the chief economist for investment bank Bear Stearns when a market plunge cost equity markets about $2 trillion. He characterized the drop as a “correction” and added: “Housing and debt markets are not that big a part of the U.S. economy, or of job creation. It’s more likely the economy is sturdy and will grow solidly in coming months, and perhaps years.”

After Bear Stearns collapsed during the financial crisis the following year, Malpass founded Encima Global, which advises institutional investors. He also advised Trump on financial matters during the campaign. His nomination was confirmed.

Some agencies, like the Department of Housing and Urban Development, had relatively few people nominated to its ranks with overt conflicts—just three of its nine nominees had either worked at a law firm on housing policy, advised banks on affordable housing, or served as an executive of a housing finance consulting firm.

And then there’s Trump’s nominees for the Department of Agriculture. Every single one of them is tied back to agribusiness in some form or fashion.

There is the secretary, former Georgia Gov. Sonny Perdue, who ran a company that trades agricultural commodities globally and who served as secretary of the Georgia Agribusiness Council. There is deputy secretary, Stephen Censky, who lobbied for the soybean industry for more than two decades as CEO of the American Soybean Association. There is general counsel, Stephen Alexander Vaden, who owns farmland that relies on the USDA’s Agriculture Risk Coverage and Price Loss Coverage programs—and he pledged to recuse himself from matters involving both (PDF). There is undersecretary for farm and foreign agricultural services, William Northey, who served as president and chair of the National Corn Growers Association in addition to taking nearly $400,000 in contributions from agricultural sector donors as Iowa secretary of Agriculture.

There is undersecretary for marketing and regulatory programs, Gregory Ibach, a family farmer who once served as president of the National Association of State Departments of Agriculture. There is undersecretary for research, education and economics, Sam Clovis, who has received campaign contributions from the agriculture sector in his failed run for Senate. And there is undersecretary for trade and foreign agricultural affairs, Ted McKinney, who worked for 19 years at Dow AgroSciences before heading into public service.

At his confirmation hearing, McKinney pledged to be a “happy warrior” for agriculture. He was confirmed unanimously by the Senate.

A Revolving Door

There are, generally put, two types of conflicts for those entering government. There is the kind in which donors and friends and industry bigwigs get jobs in government simply because of their name, reputation, or proximity to those in power. Betsy DeVos was a well-heeled donor whose kids never attended public school before becoming Education secretary. Housing and Urban Development Secretary Ben Carson was a major Trump supporter whose top aide said he wasn’t prepared to run a federal agency. Energy Secretary Rick Perry was a prominent governor, who admitted he didn’t know what the Energy Department actually did before getting there.

While Perry has gotten donations from industry officials in the past, neither DeVos nor Carson are technically conflicted. Still, their nominations stirred controversy.

Then there is the revolving door kind of conflict, in which officials go back and forth between public service and work in the private sector—usually at lobbying shops or an industry looking to get in the administration’s good graces. In April, for instance, Marcus Peacock, a top deputy to White House budget director Mick Mulvaney, left to join the Business Roundtable, a trade association. A few months later, White House spokesman Michael Short joined another such group, the National Association of Manufacturers, and was soon spotted back at the White House at an event promoting U.S. manufacturing.

In the Trump administration, there has been a healthy mix of the two, especially at the Department of Defense.

Trump has chosen numerous people for powerful Pentagon posts whose resumes are in the military contracting world. Patrick Shanahan, for instance, was nominated and confirmed to be the Defense Department’s second in command in July. Before his Pentagon gig, he oversaw supply chain management and manufacturing for Boeing, the Pentagon’s second-largest contractor, which did more than $24 billion worth of business for the military last year alone. Ellen Lord, the head of Textron Systems, the 18th-largest defense contractor in the world, was nominated to be the undersecretary of defense for acquisition, technology, and logistics. John Rood, Lockheed Martin International’s senior vice president, was nominated to be the undersecretary for policy.

But nominees to critical DoD positions also have had previous careers in public service prior to leaving for private practice. Trump’s third nominee for Army secretary, Mark Esper, is an executive at Raytheon. Before then, he served in the Bush administration as deputy assistant secretary of Defense for Negotiations Policy, as well as on Capitol Hill. Trump’s nominee for undersecretary of the Army, Ryan McCarthy, worked for former Defense Secretary Robert Gates before leaving in 2011 to join Lockheed Martin.

Those who have studied the melding of private enterprise into U.S. military structure say that Trump has accelerated a trend that was developing long before he assumed office. And while they, and even some lawmakers, including Sen. John McCain (R-AZ), find it troublesome, they also argue that it could be worse.

Within defense circles, it is well understood that Secretary James Mattis has submarined some potential nominees with far thinner resumes. It’s also understood that Mattis has been unable to staff his department with certain officials who were critical of Trump during the campaign.

Left with a smaller pool of potential talent, the Pentagon has turned to the private sector, where there is still expertise and people tend to be more apolitical. The nominations are logical, such as placing Bruce Jette, a military robotics promoter and the head of a Pentagon contractor, to serve as assistant secretary of the Army for acquisition, technology, and logistics. But they also run risks.

“Every time a Department of Defense nominee gets named, Google gets a real workout inside the building,” said Peter Singer, a senior fellow at the think tank New America and the author of numerous books on 21st century warfare. “This is happening more than it has in the past. But these nominees are not egregious. They are certainly not as egregious as what you are seeing at other agencies. They are not the ‘holy crap, how did you think that was appropriate?’ category.”

The Ethicists Themselves Are Conflicted

In defending the Trump administration’s staffing decisions, industry representatives point to the expertise that private sector officials bring as precisely why they should be staffing federal agencies.

“It is Trump’s prerogative to hire people who have first-hand knowledge of how federal regulations have impacted states, industry, workers, families,” said Thomas Pyle, president of the Institute for Energy Research, an industry funded group, in an emailed statement. “Frankly, the Trump administration could probably be reaching further into the states and industry than he already has, but at least he is attempting to look outside the swamp for help.”

Industries such as fossil fuels and financial services that felt singled out by the Obama administration see their one-time colleagues’ presence in the Trump administration as a reversion to policy informed by those it most directly affects. Obama, they say, stacked his administration with explicitly hostile officials. “Absolutely, personnel is policy,” Pyle wrote. “For eight years, the revolving door between the Obama administration and enviro lawyers, lobbyists, and activists was in full swing.”

Indeed, the revolving door between the public and private sectors, or between federal agencies and groups lobbying them, is an old and bipartisan phenomenon, and a frequent target of criticism from would-be reformers promising to shake up Washington. Chief among them is Donald Trump himself, who famously pledged to “drain the swamp” on the campaign trail and declared success on that front 100 days into his administration.

A pillar of that promise was an “ethics pledge” that Trump imposed on all administration nominees and appointees in an executive order shortly after taking office. Though weaker in many respects than a similar pledge imposed by his predecessor, Trump’s contained language designed to limit the industry-government revolving door, and implicitly acknowledged the undue influence of special interests on policymaking and regulatory processes.

But the White House then exempted wide swaths of the administration from provisions of that pledge, including every senior White House official and every former employee of the law firm Jones Day, which, in addition to representing Trump during the campaign, boasts some of the most prominent and profitable companies in the world on its client list—many of which have business before the U.S. government.

Good government groups have harshly criticized the president for abandoning the swamp-cleaning posture he ran on, though they never gave it much credence to begin with. But they also are conflicted about it. Are there cases, the question goes, where a bit of corruption is a necessary trade-off for a dose of competence? And if so, to what end?

Jeff Hauser, executive director of the Revolving Door Project, noted that the nominations Trump has made to Department of Justice have a similar quality: strong ties to corporate clients and serious resumes.

“Unlike in other parts of the government these are highly credentialed, conflicted people within the revolving door,” he explained. “That’s different than whatever the heck is going on at EPA or Energy, which are clusterfucks. This is a scandal along the lines of what normally makes people angry at D.C. It is less esoteric. But in some ways it is more dangerous because Department of Justice could clean up some of the errors made by other parts of the government.”

Trump is not unique, Hauser and others regretfully noted, in his reliance on people from private practice to fill government posts. Where he is unique is in the extent to which he is turning to individuals with no real previous government expertise for those posts.

“While some of the president’s nominees are nontraditional,” noted Scott Amey, general counsel for the Project on Government Oversight, “they are merely from a neighboring swamp and we’re in for years of the same old problems brought on by senior officials coming and going through the revolving door.”

Shortly before this article posted news broke that another set of nominations were announced (too late to include in our review). Among those listed was Scott Mugno, the vice president of safety, sustainability, and vehicle maintenance at FedEx Ground, who was the president’s choice to serve as assistant secretary of Labor at the Occupational Safety and Health Administration.

—with reporting by Joanna Purpich, Scott Bixby, Alex Brook Lynn, Tim Teeman, Kelly Weill, Justin Miller, Nico Hines, Andrew Desiderio, Emilie Plesset, and Asawin Suebsaeng

A note about our methodology: The Daily Beast used The Washington Post’s list of nominations made by Trump as well as official White House nomination notices to compile our data base. If someone was nominated twice, we counted that as two nominations. This is a database of nominations made, as much as a database of nominees put forward. We cross-referenced that list with the public disclosure forms made by nominees as well as official bios submitted by the administration and from the nominee’s prior place of employment(s). We cross referenced our work with data put together by Public Citizen. Additionally, we asked several good government groups to look over our database to ensure that no errors were made.