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Donald Trump's election has been a boon for backers of a controversial plan to pump billions of gallons of water from a Mojave Desert aquifer to Southern California including one of the president's nominees.
David Bernhardt, nominated 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 four days after Trump took office. While Bernhardt says he played no role in getting the project on that list, the example illustrates the potential conflicts of interest the industry lobbyist will face if confirmed as deputy secretary of the Interior Department.
"I have to say at the outset that I have grave concerns about this nomination," Sen. Maria Cantwell, the top Democrat on the Senate Energy and Natural Resources Committee, said at a hearing to consider his nomination Thursday. "Mr. Bernhardt is now seeking to come back through this revolving door and be part of regulating the same issues he was lobbying for in the private sector."
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.
Bernhardt told the Senate energy committee his advocacy for the project ended when he took a position helping Trump's presidential transition.
"I had no involvement with the Trump administration either directly or indirectly," he said. "I had no involvement on the Cadiz matter during the transition or with the department, none at all during that period of time."
But Cantwell and other Democrats questioned Bernhardt's deep ties to energy and mining interests that frequently petition the Interior Department for policies and permits.
As head of the the natural resources division for lobbying shop Brownstein Hyatt Farber Shreck, Bernhardt's client list has included affiliates of Noble Energy, a major Gulf of Mexico oil producer; Statoil, the Norwegian company that may build a wind farm off the New York coast; and Halliburton, the world's largest fracking services provider.
In a form filed with the Senate, Bernhardt said his lobbying was limited and 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."
Bernhardt pledged to step down from Brownstein Hyatt if confirmed and said he would forfeit his capital account with the law firm if it's not refunded first. That would also mean forfeiting potential revenue tied to the Mojave Desert project.
Interior spokeswoman Heather Swift said 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."
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.
"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 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 in the Arctic National Wildlife Refuge, according to legal filings.
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.
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."