Energy Nominees’ Industry Ties May Pose Conflict: Watchdog Groups

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By Rebecca Kern

Financial disclosure forms for two Energy Department undersecretary nominees show income from energy companies, including Southern Co. and TransCanada Corp., raising concerns from government watchdog groups of potential conflicts of interest.

Mark Menezes, nominated to the No. 3 position at the Energy Department, works in energy sector investment at Berkshire Hathaway Energy Co., while Paul Dabbar, nominated as the undersecretary for science, works in energy sector investment at J.P. Morgan. Both have personal investments in large energy companies. Menezes also previously lobbied for energy clients.

Menezes and Dabbar have said in agreements to the Office of Government Ethics that upon confirmation they will resign from their current jobs and divest from energy-related investments within 90 days. Both are awaiting a Senate floor vote on their nominations.

Government watchdog groups are concerned nonetheless with the potential for the nominees to be influenced by their past energy industry ties once they are confirmed.

“The financial or personal ties that a lobbyist or investor develops in the course of their previous employment may affect their ability to be impartial when making decisions as a representative of the public in the federal government,” Brendan Fischer, director of federal and Federal Election Commission reform at the Campaign Legal Center, a nonprofit organization focused on election law, told Bloomberg BNA.

Menezes is vice president of federal relations for Berkshire Hathaway Energy Co., and has received income exceeding $5,000 in the previous two calendar years from Southern Co. and Berkshire Hathaway Energy Co., which includes the businesses of PacifiCorp and MidAmerican Energy Co., according to his public financial disclosure form.

Menezes previously was a partner at the law firm Hunton & Williams LLP, heading its energy practice group, where he was a registered lobbyist for energy companies such as Southern Co., Duke Energy Corp., Xcel Energy Inc., and Entergy Corp., according to the Center for Responsive Politics. He also previously worked as vice president and associate general counsel for American Electric Power Co. Inc., one of the largest electric utilities in the U.S., and participates in its pension plan. He said in his disclosure that he would not participate “personally or substantially” in a matter that has a “direct or predictable effect” on AEP unless he first obtained a written waiver. He also said he would divest from Alphabet Inc. and other entities.Dabbar is the managing director for mergers and acquisitions at J.P. Morgan, overseeing energy investments, and has received income exceeding $5,000 in the previous two calendar years from TransCanada and Sempra Energy, along with 19 other large to mid-sized energy companies. He is invested in ConocoPhillips Co. Inc., Chevron Corp. and Phillips 66 Co., according to his public financial disclosure form. He said in his ethics agreement he would divest from these and other companies.Nick Loris, a fellow in environmental and energy policy at the conservative Heritage Foundation, said he’s not too concerned about a perception of conflict of interest for the nominees.

“The federal government does robust checks and tries to have as much transparency as possible to ensure those types of activities don’t happen whether it’s a Democrat or Republican,” Loris told Bloomberg BNA.

While the Office of Government Ethics is in charge of signing off on presidential nominees’ ethics and financial disclosure forms, each federal agency has a designated ethics official who makes sure a new employee follows through on ethics agreements, an OGE staff member told Bloomberg BNA on background.

Setting Example

“It starts at the top, President Trump himself has an abundant number of conflicts of interest,” Paul Seamus Ryan, vice president of policy and litigation at Common Cause, a nonpartisan good-government group, told Bloomberg BNA.

“President Trump ran on the promise of draining the swamp of corruption in Washington, but he instead only filled the swamp...and has brought a bunch of financially conflicted individuals into his administration,” Ryan said.

While the president isn’t subject to certain conflict of interest statutes, others in his administration must abide by them, he said.

In their ethics forms Menezes and Dabbar said they will exempt themselves from participating “personally or substantially” in any particular matter that would have a direct or predictable effect on their own financial interests, their families or former employers.

One way to avoid legal problems is to sell conflict-producing investment assets, which Menezes and Dabbar said they would do, he said.

The Campaign Legal Center’s Fischer said his main concern is when representatives from the energy industry are taking on government posts “it suggests that the regulated are becoming the regulators.” A concern is “that there will be an incentive to go on easier on their former friends and colleagues,” he said.

The Trump administration has provided a number of waivers to political appointees in office. Walter Shaub, the former director of the Office of Government Ethics, resigned in July due to concerns that the Trump administration’s ethics program was too weak.

Sheila Krumholz, executive director of the Center for Responsive Politics, told Bloomberg BNA that she agreed that the oversight and enforcement of conflict of interest waivers isn’t as strong as it should be. She said the OGE is a small agency that’s responsible for the entire federal government, and that “it’s an onerous task to attempt to hold all political appointees accountable.”

To contact the reporter on this story: Rebecca Kern in Washington at rkern@bna.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bna.com

For More Information

The public financial disclosure for Paul Dabbar is available at http://src.bna.com/rNF

The public financial disclosure for Mark Menezes is available at http://src.bna.com/rNH

The ethics agreement for Menezes is available at http://src.bna.com/rNJ

The ethics agreement for Dabbar is available at http://src.bna.com/rNK

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