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26 Federal Agencies Provide Scant Details on How They Are Managing Potential Conflicts of Interest

Twenty-six federal agencies provided no ethics waivers relating to political appointees in the Trump administration in response to Freedom of Information Act requests made by the Project On Government Oversight (POGO) in April. (POGO is waiting on 28 other federal agencies to respond.) Some of these 26 agencies employ political appointees who were registered lobbyists during the last two years, raising concerns that the appointees might be in violation of aspects of President Trump’s ethics pledge.

For example:

  • Office of the United States Trade Representative counsel Stephen Vaughn lobbied for Skadden, Arps, Slate, Meagher & Flom throughout 2015 on “issues pertaining to trade law reform proposals and implementation and enforcement of US trade laws.” Vaughn’s practice also included administrative litigation before the Department of Commerce, judicial appeals of trade remedy cases, and policy advocacy before Congress and relevant agencies, according to his subsequent employer King & Spalding.
  • Small Business Administration advisor Nathan Miller was a registered lobbyist at Public Strategies Washington Inc. from 2015 to 2017 and the OB-C Group from 2007 to 2015. Lobbying disclosure documents show Miller worked on several issues pertaining to small business policy, including the Small Business Lending Oversight Act, JOBS Act implementation, Marketplace Fairness Act, and the Small Business Tax Equalization and Compliance Act.
  • Department of Labor staffer Byron Anderson was a registered lobbyist at the Transamerica Corporation through 2016. His lobbying at Transamerica focused on laws that affected financial planning, insurance policies, and financial issues including Labor’s fiduciary rule for financial planners and the Affordable Care Act.

The absence of waivers for these three executive agency staffers—and any other executive agency staffers who previously lobbied on issues related to their current positions—may be due in part to some key differences between Trump’s and Obama’s ethics pledges (both pledges apply only to political appointees). Perhaps most importantly, Obama’s pledge prohibited registered lobbyists from going to work for agencies they had lobbied until at least two years had passed since that lobbying. Trump rescinded that ban. Moreover, no waivers are necessary if an appointee does not work on the prohibited issue or matter covered under Trump’s pledge.

Lack of clarity around the more narrow bans under Trump’s pledge, and the relatively small number of political appointees in the Trump administration to date, may also help account for the low number of ethics documents provided to POGO.

Political appointees include heads of agencies and their close advisors, who set the course of the agencies they lead. The dearth of official information detailing how those political appointees are handling potential conflicts involving their former employers and clients—which range from high-powered lobbying firms to energy, financial, and other types of companies—raises concerns about whether government decisions are being made in the public’s interest.

The Trump administration disclosed last week that it is giving some of its conflicted political appointees in the White House a pass when it comes to complying with President Trump’s ethics pledge by issuing waivers to those appointees. The Office of Government Ethics (OGE), an independent federal agency, is expected to make information on ethics waivers for appointees in federal agencies public on Wednesday. Trump’s ethics pledge applies to all political appointees, both in the White House and in federal agencies.

The waivers allow these appointees to break Trump’s rules, or aspects of the rules. The waivers, when they exist, provide some insight into the appointees’ conflicts of interest. However, even with this information, the full picture of potential conflicts of interest in the administration is far from clear due to vague definitions, loopholes, and decades-old systemic weaknesses in the federal government’s ethics system, according to POGO’s investigation.

A key concern relates to former lobbyists for entities with a financial stake in government decision-making who become political appointees. The revolving door of former lobbyists into the highest reaches of government creates a significant risk that these former lobbyists could be boosting their former employers’ or ex-clients’ profits at the expense of the rest of us. President Obama had banned former lobbyists from becoming political appointees at the agencies they lobbied, although he issued a number of waivers to that ban over his eight years in office. President Trump has lifted that ban, and numerous former lobbyists have been given political appointments throughout the White House and federal agency leadership.

Other information on how conflicts of interest are being handled—namely written recusal statements—is not being made public by the White House or OGE. Disclosure is not required by statute. (POGO asked for this information in its FOIA requests to the 54 agencies.) These recusals document when a political appointee or other government employee has agreed not to be involved in an aspect of their agency’s work because they have a potential conflict of interest. An appointee who avoids a conflict covered by Trump’s pledge might not need a waiver, but it is considered a best practice for them to document the conflicted matter or issue they are avoiding with a recusal statement. This helps create a bright line that informs co-workers that the appointee should not be involved.

The paucity of information underlines systemic weaknesses in Trump’s ethics pledge and with the federal government’s ethics rules.

On June 1, the White House released details of waivers for 17 named staffers in the Executive Office of the President, which is Trump’s team in the Oval Office rather than the agencies. These staffers include spokeswoman/advisor Kellyanne Conway, Chief of Staff Reince Priebus, and energy policy advisor Michael Catanzaro. The waivers allowed the staffers to work on issues they had lobbied on in the past or to meet with former clients. Catanzaro, for instance, will work on gas and oil issues even though he previously lobbied on those issues on behalf of private energy companies while working for the CGCN Group.

The White House also posted waivers covering multiple individuals. One for “All EOP Appointees” allowed White House staff to communicate with political and news organizations covered in the ethics waiver, and one for “Former Jones Day employees” allowed White House Counsel Don McGahn and others to meet with their former law firm, Jones Day, which has represented Trump since his campaign. The number of waivers for White House officials is significantly higher than the number issued by former President Obama: Trump issued around the same number of waivers for White House officials in the first four months of his Administration that Obama did over his entire eight years in office.

Important as the administration’s release of waiver information on White House staff is, it’s equally important to release that information for political appointees inside agencies—appointees who are also critical in carrying out the agenda of the administration.

POGO’s Investigation

This March, POGO used the Freedom of Information Act to request all ethics waivers and recusal agreements issued since January from 54 federal agencies, 26 of which have responded.

Aside from the Labor and Veterans Affairs Departments, most of the 26 are independent agencies. So far, POGO has not been sent a single ethics pledge waiver.

Of the 26 agencies, 14 found “no responsive records.” Seven provided some records, including a handful of recusal agreements (generally for career staff, rather than political appointees), but not waivers from Trump’s ethics pledge. Two agencies withheld all responsive records from POGO, citing privacy exemptions, although one did specify that the withheld records fell under agency-specific supplemental ethics standards, and were not related to the ethics pledge. Two agencies stated they had no waivers and could not provide recusal information as they were not handled by the ethics office but by individual supervisors throughout the agency. The final agency informed us that they had found no waivers, but that we would have to file separate forms for other ethics records.

We researched the employment backgrounds of appointees to the agencies that responded to us and attempted to contact individuals with lobbying backgrounds to see if they had filed waivers with their agencies, but none responded to our requests.

When Obama created his ethics pledge, he built into it restrictions on when it could be waived for individual appointees. He declared that waivers had to be in the public interest, and he defined the public interest to “include, but not be limited to, exigent circumstances relating to national security or to the economy.” Trump eliminated those criteria and spelled out none of his own, apparently allowing waivers to be issued on the basis of any justification or none. Obama also tasked the Office of Government Ethics with publishing an annual report on the administration of his ethics order, which included a list of appointees coming to and leaving public service who received an ethics waiver. Trump eliminated that check on compliance.

Under Obama, an appointee who was a former registered lobbyist had to get a waiver to join the administration. Under Trump, former lobbyists do not need a waiver to join the administration, although, absent a waiver, they still are barred from working on certain matters and issue areas they worked on as lobbyists.

Under Trump’s ethics pledge, former lobbyists who are political appointees cannot, for two years, “participate in any particular matter on which” they “lobbied within the 2 years” prior to their appointment. Nor can they “participate in the specific issue area in which that particular matter falls” during that same time period.

Whether former lobbyists or not, political appointees are also barred from participating for two years on any “particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts.”

Some of the terms, especially “specific issue area,” haven’t been well defined. Neither the Obama nor the Trump White House defined the term in their ethics pledges. The Trump White House provided a definition to OGE, which OGE in turn incorporated intoguidance to agencies. But the parameters of the definition are still fuzzy: “specific issue area” is defined as a “particular matter of general applicability.” The vague definition provides wiggle room to former lobbyists. For instance, say an appointee previously lobbied for the natural gas company on certain aspects of the methane emissions rule. Is the appointee barred only from working on the specific sections of the same rule that she lobbied on? How about the methane emissions rule in general? Or is she disqualified from participating in the oversight of emissions from the natural gas industry in general?

If it’s determined that a political appointee might violate the ethics pledge, they could seek a waiver to work on that matter or they could try to stay in compliance and simply not work on that issue. Because Trump’s pledge ends Obama’s ban on lobbyists as political appointees, this makes recusals for former lobbyists that are now allowed to be political appointees in the current administration more important than before.

In that event, to ensure they do not work on these prohibited activities, it is a best practice to document that they are recusing themselves.

However, the lack of recusal statements underlines another systemic weakness in the federal government’s process for managing conflicts of interest: with a few exceptions, government employees—including political appointees—do not have to put in writing when they recuse themselves from an issue where they face a conflict of interest. Furthermore, there is no requirement that written recusals be kept in a central location in an agency.

Out of the 26 agencies that have responded to POGO’s FOIA to date, only two supplied documentation on recusals involving political appointees. Five General Services Administration appointees officially recused themselves in writing, four from work related to their former employer as a result of Trump’s ethics pledge, and one from an issue involving land annexation. Two US International Trade Commissioners also recused themselves from specific investigations without providing an explanation.

“Drain the Swamp”?

Trump campaigned heavily on the message that Washington was corrupted by lobbyists and special interests.He pledged to “drain the swamp” by preventing former political appointees from lobbying the government for five years, among other reforms.

Prompted by severalnews reports on the number of lobbyists populating the White House and upper tiers of federal agencies, OGE sent an April 28 letter to federal agencies setting a June 1 deadline for submitting any waivers. After OGE released this “data call,” however, Office of Management and Budget Director Mick Mulvaney contested OGE’s jurisdiction over the White House. Mulvaney backed down after OGE Director Walter M. Shaub, Jr., detailed OGE’s authority to request the information. Mulvaney still has an outstanding request to the Justice Department’s Office of Legal Counsel to deliver a legal opinion on OGE’s authority.

Depending on what it says, the Office of Legal Counsel’s opinion could enable future OGE requests to agencies for ethics waivers or hobble their independent authority to request this information. Regardless, the White House’s showdown with OGE raises questions about their commitment to transparency relating to implementation of President Trump’s ethics pledge.

Trump’s ethics pledge was disappointing on a few grounds. He lifted Obama’s ban on registered lobbyists becoming political appointees, downgraded Obama’s 2-year ban on communications between an appointee and employees of their former agency to a 1-year ban, and ended OGE’s annual report (which included a list of ethics waivers). However, in at least two areas, Trump put in place somewhat stronger restrictions involving the work appointees can do after they leave government. First, under Trump’s ethics order, appointees cannot go on to serve as advocates for foreign governments, foreign political parties, or any other entity that would require them to register under the Foreign Agents Registration Act of 1938. Second, after appointees leave the government, they cannot become registered lobbyists and call on their former agencies for five years. Although that restriction sounds strong, Trump’s definition of “lobbying activities” departs from the Lobbying Disclosure Act in that it exempts actions regarding rulemaking, adjudication, and licensing, among other things. This departure provides appointees enough wiggle room to avoid the 5-year lobbying ban altogether.

President Bill Clinton also had some similar ethics restrictions, yet he revoked them at the end of his administration. As with other ethics pledges, nothing would prevent Trump from doing the same unless aspects of his ethics pledge are codified into law, as POGO has supported.

Systemic Weaknesses

Because President Trump eliminated some of his predecessor’s checks on ethical abuses, the system’s longstanding weaknesses have taken on added significance..

One such weakness is that the federal government’s current ethics system, in place since the late 1970s, largely relies on self-reporting and self-policing. Appointees’ compliance with ethics pledges and other mechanisms for keeping conflicts of interest out of government—such as the Ethics in Government Act, federal criminal laws, and government-wide or agency regulations—is almost completely the responsibility of the appointee. There is little independent assessment by ethics officials for appointees that don’t have to undergo Senate confirmation.

Another weakness is that, while appointees who must be confirmed by the Senate undergo a rigorous background and ethics check as part of their nomination process, less senior political appointees need only submit financial disclosure forms detailing their previous employment and financial assets. Agency officials known as Designated Agency Ethics Officials (DAEOs) review the forms and meet with the appointee to discuss any potential conflicts, but if the appointees don’t disclose them in the first place, there’s no way for the DAEO to know.

Further, the legal definition of language in the ethics rules such as “specific issue area” are vague enough to invite a wide range of alternative interpretations. Finally, appointees may receive counsel from their own attorneys or those in the White House that conflicts with that from the DAEO. Recusals, like disclosures, must be initiated by the appointee, and do not have to appear in writing or be made public.

More Transparency Needed

In 2009, Senator Charles Grassley (R-IA)wrote to Obama’s OGE.

“The American people deserve a full accounting to better understand who is running the government and whether the administration is adhering to its promise to be open, transparent, and accountable,” Grassley wrote, “To date, there is no one place taxpayers can go to find all the waivers and recusals issued former lobbyists by the White House and federal agencies.”

It is still true that there is no central website with all of this information for the public to see. There should be.

Another reform—requiring that recusals be put in writing and centrally collected by an agency ethics official and at the Office of Government Ethics—is a best practice that could be made a requirement.

It is difficult to fully assess how President Trump’s ethics pledge is working in practice without more information on the political appointees. In part, that’s due to the design of his ethics pledge. But the reliance on self-reporting by individuals, vague definitions, lack of transparency, and no general requirement for written recusals are systemic problems that transcend the Trump administration that should be addressed immediately.

David Hilzenrath and Scott Amey contributed reporting.