David Bernhardt, on tap to be the No. 2 official in the Interior Department, has been a paid consultant to the water project’s developer, Cadiz Inc., and his law firm stands to collect millions of dollars in stock options from the company if the project clears federal regulatory hurdles and meets other milestones, according to a filing with the Securities and Exchange Commission.
After being fought by environmentalists and blocked by the Obama administration, Cadiz’s venture landed on a list of priority projects leaked Jan. 24, four days after Trump took office.
Bernhardt had left the transition team before the list was disclosed, but environmentalists said the episode raised the possibility he may have advocated for the project from within — illustrating the potential conflicts of interest the lawyer could face if confirmed as deputy secretary of the Interior Department.
“It just seems too neat and tidy, frankly, that here’s Bernhardt on the transition team, and this project pops to the top of the infrastructure list,” said Randi Spivak, the Center for Biological Diversity’s public lands director. “You just connect the dots, and take a step back, and while we may not see fingerprints, I think it’s a fair assumption that Bernhardt’s likely having an influence.”
Bernhardt did not respond to requests for comment, but in a separate form filed with the Senate, he said his lobbying was limited and instead he focused on litigation and negotiations. Bernhardt said he was registered as a lobbyist for some clients as a precaution “based upon the mere assumption that I might potentially engage in regulated lobbying activities or contact covered officials for the particular client when the client retained the firm, and those assumptions were never borne out.”
When the Senate Energy and Natural Resources Committee interviews Bernhardt for the job Thursday, the lawyer may be pressed to explain how he will effectively advocate for the public interest — instead of the oil drillers, electric utilities and pipeline developers he has represented and lobbied for during at least seven years in private practice.
Bernhardt’s deep ties to energy and mining interests that frequently petition the Interior Department for policies and permits have raised concerns among senators who are vetting his nomination — including Democrats gearing up to do battle.
“I am gravely concerned about Mr. Bernhardt’s record of working on behalf of corporations at the expense of the environment,” said Senator Maria Cantwell, of Washington state, the top Democrat on the Senate energy committee.
Interior spokeswoman Heather Swift noted that Bernhardt had undergone an “extensive pre-clearance examination” with the department’s senior ethics officials.
“If confirmed, he will have no financial interest in Brownstein Hyatt or its clients,” Swift said by email. “On any matter involving a former client, if confirmed, Mr. Bernhardt will seek, confer with and follow the guidance of DOI’s designated agency ethics official and adhere to the body of law and regulations that guide federal officials to ensure they recuse as appropriate.”
As head of the the natural resources division for lobbying shop Brownstein Hyatt Farber Shreck, Bernhardt’s client list is a Who’s Who of energy firms doing business with the federal government. He’s represented affiliates of Noble Energy Inc., a major Gulf of Mexico oil producer; Statoil ASA, the Norwegian company that may build a wind farm off the New York coast; and Halliburton Co., the world’s largest fracking provider.
“Bernhardt would have an influence on important decisions that directly or indirectly impact clients for whom he lobbied just months ago,” said Kate Kelly, public lands director at the Center for American Progress. “When you look at who he’s worked for and who’s been paying his paycheck, it’s hard to see how he could be an impartial decision-maker on behalf of the American people.”
As deputy secretary of the Interior, Bernhardt would effectively be the department’s chief operating officer — one of just two people at the department with line authority over its more than 60,000 employees. The deputy plays an important role refereeing disputes among its agencies and typically has a hand in every high-level Interior Department decision.
But Bernhardt’s hands would be tied on many issues, under a formal ethics agreement pledge to recuse himself for one year from participating “substantially” in matters involving his former law firm or its clients. Bernhardt also is expected to abide by a voluntary Trump administration ethics pledge, effectively extending that recusal to two years.
Arctic to Gulf
Bernhardt has lobbied for a proposed copper mine near Tucson, Arizona, and against a deep-water drilling ban in the Gulf of Mexico. He and his firm also have represented Taylor Energy Co., a New Orleans company that has spent years combating a chronic oil leak in the Gulf of Mexico. Bernhardt also represented the state of Alaska in a 2014 lawsuit against the Interior Department in a bid to allow oil exploration under the Arctic National Wildlife Refuge, according to legal filings.
“David Bernhardt is a walking conflict of interest,” said Aaron Weiss, a spokesman for the Center for Western Priorities, an environmental group that opposes the nomination. “Because that list of conflicts is so long, it’s not clear that he would have anything to do at Interior if he’s confirmed.”
Bernhardt is hardly the first Trump nominee faced with navigating an ethical minefield of past lobbying clients as an administration appointee, despite the president’s promise to “drain the swamp.” Jeffrey Wood, a lobbyist who previously worked for utility Southern Co., was in January appointed as the acting assistant attorney general charged with overseeing a Justice Department division that enforces environmental laws. Brian McCormack, previously vice president of external affairs for utility trade group Edison Electric Institute, is now Energy Secretary Rick Perry’s chief of staff.
Critics say a one-year recusal falls short of what is needed, especially since Bernhardt could secure government waivers to be involved in Interior Department business overlapping with his former law firm and clients. And they say the appearance of a conflict of interest would cast a pall over any major policy decisions after his recusal period is up.
Interior Secretary Ryan Zinke has described Bernhardt as “thoughtful and fair” — traits on display during his previous service as the Interior Department’s top lawyer under former President George W. Bush. “The solicitor’s office, Interior political and career staff and the department’s diverse stakeholders respected Dave’s intellect, leadership and management skill,” Zinke said in a statement last month.
Former Interior Department colleagues praise Bernhardt’s approach and integrity, including Dale Hall, who worked alongside the nominee as director of the Fish and Wildlife Service.
“David was one of those people that I was deeply impressed with from the standpoint of his ethics,” Hall, chief executive officer of conservation group Ducks Unlimited, said in an interview. “If you are going to have the Department of Interior run properly, you have to have someone who knows the issues.”
The Mojave Desert water project, which could dry up waters that help sustain bighorn sheep, bobcats and other wildlife, “could make millions for his firm” if it goes forward, according to 150 conservation groups that signed a letter to senators opposing Bernhardt’s nomination. Brownstein Hyatt is slated to win stock options if the project clears a possible environmental review and other regulatory milestones.
Bernhardt has pledged to step down from Brownstein Hyatt if confirmed and said he would forfeit his capital account with the law firm if it is not refunded first. That would also mean forfeiting potential revenue tied to the Mojave Desert project.