Trump's Administration Will Regulate Trump's Businesses, Raising Prospect of Conflicts

By Rosalind S. Helderman, Drew Harwell and Tom Hamburger, The Washington Post

16 January 17

 

irplanes belonging to Donald Trump’s businesses will be inspected over the next four years by employees of the Federal Aviation Administration that he will lead.

Disputes over Trump’s trademark registrations could be reviewed by judges appointed by his hand-picked commerce secretary. His Department of Housing and Urban Development could reverse its past opposition to a potentially lucrative sale of a large subsidized housing complex in New York partly owned by the president-elect. And Trump’s Environmental Protection Agency will have the power to roll back clean-water rules he and other golf course owners have said are harmful to their industry.

When Trump takes office on Friday, he will assume control of a federal bureaucracy with enormous power to bolster nearly every corner of his real estate, licensing and merchandising empire — and enhance his personal fortune.

Trump announced steps last week that he and his lawyers said would provide adequate safeguards to separate his business from government. He said he will shift assets into a trust that will be managed by his sons. Providing few specifics, he promised no new foreign deals and said the company would adopt new internal systems to scrutinize potentially problematic domestic transactions.

But Trump and his lawyers did not address how his administration will approach the range of regulatory actions and other decisions that could directly touch the business, which in addition to Trump-branded properties around the world includes several dozen golf courses, office and condominium buildings, a winery, and his beachfront Mar-a-Lago club in Palm Beach, Fla. Trump’s properties also include his newly opened luxury hotel in Washington’s Old Post Office pavilion, which is leased from the federal government.

At a minimum, according to ethics experts, government officials tasked with making decisions affecting Trump businesses could feel pressure to keep the boss happy. At worse, experts say, Trump or his allies could abuse their power to sway decision-makers.

“We are going into an inauguration in a completely unprecedented situation,” said Trevor Potter, who advised several GOP presidential campaigns and served as chair of the Federal Election Commission. “We face now . . . a president with a huge number of active business interests who has not taken steps to prevent government decisions concerning those interests from landing on his desk. This is a big step backwards.”

Potter and other ethics experts say it’s not too late for Trump to take additional steps to insulate himself from such conflicts. Richard Painter, who served as chief ethics counsel to former president George W. Bush, called on Trump to enact an executive order prohibiting his appointees from participating in matters involving his businesses and enacting special civil service protections for other government employees who must do so.

Without such action, Painter said, “public trust is completely gutted. It becomes: ‘I’m the president. I’m special.’”

Spokesmen for Trump’s transition and business did not comment in response to a list of detailed questions about how the president-elect’s administration and company will handle likely interactions between his businesses and specific agencies.

In announcing his plan last week to separate from the management of the Trump Organization, Trump said his sons Eric and Donald Jr. would run the company “in a very professional manner.”

“They’re not going to discuss it with me,” he said, promising a shield between the Oval Office and Trump Tower.

Sherri Dillon, a lawyer who helped design Trump’s move, said Trump will limit the information he receives about his business to profit and loss statements and that the Trump Organization would appoint an ethics adviser to monitor its activities.

“He instructed us to take all steps realistically possible to make it clear that he is not exploiting the office of the presidency for his personal benefit,” she said.

Most government employees are civil servants who are expected to apply the rules equally as they carry out their regulatory duties. Spokesmen for several government agencies said their workers could be trusted to regulate Trump’s businesses fairly. And one legal expert said government workers responsible for enforcing laws and regulations are prohibited from bending the rules. “If they say, ‘Tell me how to rule, and I’ll rule that way,’ that’s clearly not legal,” said John F. Duffy, a University of Virginia law school professor who specializes in intellectual property law, referring to government trademark officials.

But employees have typically not been asked to apply the rules to businesses owned by their ultimate boss, the president himself — and no law prohibits the president from profiting from his elected position.

Tensions have already been apparent within the government over Trump’s handling of ethics issues. After the Office of Government Ethics director last week criticized Trump’s decision not to divest from his business, House Oversight Committee Chairman Jason Chaffetz (R-Utah) summoned him for questioning. Trump chief of staff Reince Priebus said on ABC’s “This Week” that the OGE director “ought to be careful because that person is becoming extremely political.”

Nearly every department of government could come into contact with aspects of Trump’s businesses — and, because Trump is not divesting, his bottom line will be at stake.

Take Trump’s share in Starrett City, a complex of 46 low-income apartment towers spread over 140 acres in Brooklyn closely regulated by HUD.

Trump, who once called the property “one of the best investments I ever made,” reported last year that his 4­ percent share in the complex was worth up to $25 million and brought in up to $5 million each year.

The Trump administration will face a decision in 2020 that could directly affect how much he makes from the investment in the future. That will happen when HUD, likely to be headed by Trump rival-turned-supporter Ben Carson, will negotiate renewal of a loan subsidy program that reduces investors’ mortgage interest payments. Spokesmen for HUD and the property owners did not respond to requests for information about the value of this subsidy. Advocates for low-income housing have argued that government subsidies have made ownership of low-income housing highly profitable.

Another potential boost for Trump’s revenue could come if HUD reverses a 2007 decision in which the agency blocked owners from selling the property as Brooklyn’s real estate market boomed.

Trump clashed at the time with Sen. Charles E. Schumer (D-N.Y.) and other opponents of the sale, who accused owners of seeking to make money at the expense of poor tenants. “You can’t stop free enterprise,” Trump told the New York Daily News. “This is not Communist China.”

In addition to HUD approval, a sale would likely require the blessing of New York officials who forged an agreement with investors and Schumer after the 2007 fight to keep Starrett City as a housing site for middle- and low-income families for years into the future.

Under questioning from Democratic senators last week during his confirmation hearing, Carson committed to inform the Senate Banking Committee of all future decisions related to Trump properties.

Sen. Sherrod Brown (D-Ohio), a member of the committee, told The Washington Post that Carson’s response was not enough and that the Trump family should sell its stakes in Starrett City and any other HUD-assisted property it owns.

“An administration with personal financial interests that compete against American interests is ripe for corruption,” Brown said.

Some decisions with implications for Trump’s business could come in more obscure areas of the executive branch.

Applications for trademarks — a significant asset for Trump’s businesses that rely heavily on his brand — are approved by government examiners at the U.S. Patent and Trademark Office.

Government records show Trump’s campaign and business hold more than 100 trademark registrations, some of which will need to be approved for renewal by government workers in coming years. Trump’s business has pending applications for eight more, and daughter Ivanka Trump’s business filed three applications in December.

Disputes over trademark registration are heard by a government body called the Trademark Trial and Appeal Board, whose judges are appointed by the commerce secretary. While judges have not been removed in the past when a new president takes over, experts said it was not clear anything would prohibit an administration from removing trademark judges and replacing them with favored candidates. Regardless, Trump’s agency chief will fill vacancies.

One dispute in front of the board, which began when Trump’s attorneys jousted with a musician who created an iPhone trumpet game called “iTrump,” is ongoing. The Trump team filed its latest legal argument last week.

Ken Kunkle, a Minnesota attorney specializing in trademark law, said the trademark judges could feel pressure in a Trump-related case.

“You’ve got a situation where you’re hearing a case involving the president of the United States,” he said. “From that standpoint, I imagine it could involve some discomfort.”

There could also be pressure on government aviation inspectors.

Trump’s companies own a Boeing 757 jet dubbed “Trump Force One,” a smaller Cessna Citation X plane and three Sikorsky helicopters, all of which were built at least 20 years ago, Federal Aviation Administration registrations show. Those aircraft are inspected and regulated by the FAA, which will be led by a Trump appointee.

All aircraft, including Trump’s, are subject to random “ramp inspections” by FAA inspectors, including reviews of logbooks and maintenance records. Those inspectors would be expected to oversee the Trump-company aircraft for safety, maintenance and other regulations, and potentially fine or otherwise penalize the company in case of violation.

One former FAA manager said the issue is already being discussed among the agency’s employees, who worry a vindictive Trump looking for budget cuts could target the agency if displeased with its inspectors’ actions.

“There’s a lot of fear right now among employees at the FAA,” said the former manager, who spoke on the condition of anonymity to avoid offending the new president. This person predicted that FAA inspectors would be reluctant to find anything wrong with Trump’s aircraft, wary that doing so could be “a career-buster.”

Issues related to Trump’s aircraft have come up before: The FAA grounded Trump’s Cessna jet during his presidential campaign because its necessary registration had expired. Trump resolved the issue by registering the plane under a new owner — another one of his companies, FAA records show.

Potential conflicts could also arise involving Trump’s condo projects and hotels, which have encountered government regulators in the past.

Contractors at his construction sites have been ticketed and fined by the Occupational Safety and Health Administration, according to Labor Department records. The department’s wage and hour division has tracked complaints of overtime and pay violations.

Trump appealed to the independent agency that handles labor disputes, the National Labor Relations Board, last year after employees of the Trump International Hotel in Las Vegas sought to join the Culinary Workers Union. The president-elect settled that case after the election, negotiating a new contract with more than 500 housekeepers, servers and other hotel staff.

As president, though, Trump will have the power to remake the NLRB. He will be able to name new members over time and top staff, including the general counsel, who helps decide which cases the court takes up.

Once he takes office, Trump’s businesses will likely be asking Trump’s government for permission to hire foreign workers.

Trump businesses have requested visas for more than 500 foreign cooks, housekeepers and other workers since 2013, according to government data.

While Trump has pledged in recent weeks that his administration will “follow two simple rules: Buy American and Hire American,” his companies are likely to continue seeking to import labor for jobs such as picking grapes at the Trump Winery in Virginia or waiting tables at the Trump National Golf Club Jupiter in South Florida.

Future Trump-company requests will be reviewed by the Labor Department and visas will be administered by the Department of Homeland Security, both of which will be led by Trump appointees.

In other areas, Trump’s government will be in a position to enact policies that his businesses have previously pushed for.

Trump’s golf courses, for instance, are members of professional associations that fought a 2015 move by the EPA to better define what bodies of water receive federal oversight.

The rule has been put on hold by court action and Trump, like many Republicans, has said he wants to overturn it.

“We see the clean water rule as something that could very much put our courses out of business,” said Bob Helland, the director of congressional and federal affairs for the Golf Course Superintendents Association of America, whose membership includes employees at 12 Trump courses. “We’re very comforted by the fact that he comes to the White House with a background in the industry. We’re happy to see someone who knows what it takes to maintain a course.”

Dalal Aboulhosn, a deputy legislative director for the Sierra Club, said she fears Trump has a “vested interest” in rolling back the rule. “We would like to see a clear and functioning clean water act that makes sure our waters are protected for all Americans,” she said.

Drama could unfold behind the scenes at the Internal Revenue Service, where employees face the potentially uncomfortable task of reviewing the complex personal finances of the president.

Trump has repeatedly refused to release his tax returns, breaking with modern tradition in which presidential candidates disclose their records to show the public what conflicts, if any, might exist. Trump reiterated during his news conference last week that he would not release his returns because of ongoing audits and his belief that Americans don’t care about the returns. Polls have shown that the public feels otherwise, with a Pew Research Center survey this month finding that 60 percent of Americans believe Trump has a responsibility to release his returns.

As president, Trump will be automatically audited each year, a practice described in the IRS manual that has been in place for presidents and vice presidents since the 1970s. As with other traditions not enshrined in law, Trump could change the practice by ordering the IRS or his treasury secretary to forgo the annual audit, legal experts said.

Every elected president, dating back to Richard Nixon, has voluntarily released his tax returns each year, allowing the public to serve as the ultimate check-and-balance on whether potential tax errors by the president appeared to have been ignored by a friendly auditor.

Trump has not said if he would follow the practice of the annual audit or if he would abide by the tradition of voluntarily releasing his returns.

“For decades, that crowd-sourcing has been the solution — the idea that sunlight and disclosure would guard against impropriety,” said Joe Thorndike, director of the Tax History Project at Tax Analysts, a nonprofit tax policy center.

If required by auditors to pay back taxes, Trump could also challenge the ruling before the U.S. Tax Court, whose judges are presidential appointees.

“Part of our culture as tax practitioners is the understanding that the IRS is not entangled in politics,” said Steven M. Rosenthal, a longtime tax lawyer and senior fellow at the Urban-Brookings Tax Policy Center. “What does it mean for a president to flout that history? Where does it take us?”