Cronyism and the Trump Administration

Despite his campaign promises, President Trump has been staffing his Administration with ex-lobbyists and industry insiders, and now they’re exploiting every tool at their disposal—including the regulatory processes, government contracts, and the courts—to benefit their former industries.

—After a former airline lobbyist was placed on the Department of Transportation’s deregulatory “Task Force,” the agency rolled back a baggage fee disclosure rule at his former firm’s request. Daniel Elwell is a former member of DOT’s “Regulatory Reform Task Force” who served as Secretary Elaine Chao’s “Senior Adviser for Aviation” and is now a Deputy Administrator of the Federal Aviation Administration. Before joining the Trump Administration, Elwell served as a lobbyist for American Airlines and as an executive with industry trade group Airlines for America (A4A). During his time at A4A, the airline lobbying group consistently petitioned DOT to block major rules, including one requiring the disclosure of ancillary fees imposed on passengers – such as baggage fees. A4A’s efforts were futile until President Trump took office, appointed Elwell to advise Secretary Chao, and the rule was suddenly stopped in its tracks.

SIDEBAR: Rolling back rules at the behest of corporations has become a hallmark of the Trump Administration’s abuse of the regulatory process. In Elwell, the airline industry seems to have had its man on the inside doing the industry’s bidding. Within one week of President Trump’s inauguration, A4A requested the Administration freeze the baggage rule and other traveler protections. A4A followed up with DOT in February, and less than a week later, the agency announced it would freeze the rulemaking to “allow the President’s appointees the opportunity to review and consider this action.” And now, just last week, the Administration officially withdrew the baggage fee disclosure rule entirely, a decision that was celebrated by A4A.

—The Administration used a lawsuit against the Borrower Defense Rule to justify rolling it back, and Trump officials have ties to the for-profit college group that filed the suit. In May, the California Association of Private Postsecondary Schools (CAPPS), a for-profit college lobbying group, filed suit against the Department of Education (ED) to challenge the Borrower Defense Rule, which cracks down on predatory practices by for-profit colleges. Less than three weeks later, the Trump Administration postponed key provisions of the Rule, citing CAPPS’s suit as its justification. Senior ED officials have close ties to CAPPS, raising questions as to whether the Administration coordinated with the group to roll back the Rule. For example, Brandon Sherman, who currently holds a senior counsel position at ED, presented at CAPPS’s annual conference in October, and his former two-person education consulting firm provided a “Federal Legislative Update” at CAPPS’s 2016 conference and conducted a workshop covering the then-proposed Borrower Defense Rule at CAPPS’s 2015 conference.

SIDEBAR: The Administration believes it can use the CAPPS lawsuit to dismantle critical protections for student borrowers quickly and quietly, without going through the normal notice and comment process. They’re using the suit to invoke § 705 of the Administrative Procedure Act, which allows an agency to delay a rule due to pending litigation under certain limited circumstances. The Administration’s entire analysis of these circumstances—and its entire justification for delaying the Borrower Defense Rule—was a single page, leading the 19 states now challenging the Rule’s delay to conclude, “the Department’s invocation of 5 U.S.C. § 705 and the CAPPS litigation is a pretext.”

—The Administration awarded a $4 million contract to an airport security company just months after President Trump appointed one the company’s top lobbyists to a position at TSA. Prior to joining the Trump Administration as TSA Chief of Staff, Chad Wolf served as a lobbyist for Analogic Corp, a multinational security technology company. Wolf personally lobbied the government on behalf of Analogic Corp. to test and buy the company’s carry-on baggage security equipment for airports as late as December 2016. According to executives from the company, Wolf continued to communicate with his former client after he entered the Trump Administration from his new perch at TSA. Months later, TSA announced it was testing and funding $4 million in further development of the very Analogic Corp technology Wolf lobbied the government to fund before entering the Administration.

SIDEBAR: Wolf may have violated Executive Order 13770, which requires political appointees not to “participate in any particular matter” related to their former employer and clients for two years, “including contracts and regulations.” When news of Wolf’s contacts with Analogic Corp were first reported this past July, TSA stated Wolf had “neither requested nor received a waiver” from the E.O.

—A former pharma lobbyist overseeing all Trump Administration health care rules rolled back an anti-price gouging rule he lobbied against before joining the Administration. n March, President Trump appointed Joseph Grogan OMB Associate Director of Health Programs. Prior to his appointment, Grogan served as chief lobbyist for Gilead Sciences, a company that was subject to multiple government investigations for price gouging. Grogan now leads White House drug policy, and in the words of a former Centers for Medicare and Medicaid Services (CMS) administrator, “there’s no policy coming out of CMS that he doesn’t have the power to veto.” One example: A rule that imposes civil monetary penalties on drug makers that knowingly overcharge black lung clinics, rural health centers, childrens’ hospitals, and other public health providers who participate in the 340B drug discount program. The rule, which was set to take effect in March, was first delayed by HHS the very same week Grogan was appointed to run White House pharma policy.

SIDEBAR: Despite personally lobbying on the 340B program until as late as March 2017, Grogan now leads President Trump’s “Drug Pricing and Innovation Working Group,” which convened discussions with pharma executives on a range of topics, including rolling back the 340B anti-price gouging rule. That’s exactly what the Administration did—and they did it illegally. In a blatant and unlawful attempt to circumvent the Administrative Procedure Act, the Trump Administration has now delayed the rule four times rather than going through the required process for repealing the rule.

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