A Blueprint for Cronyism: President Trump’s Illegal Infrastructure Plan to Enrich His Friends

Posted by Content Coordinator on Wednesday, February 7th, 2018

DEMOCRACY FORWARD

Donald Trump and SkyscraperPresident Trump made rebuilding America’s infrastructure a central part of his campaign, promising to invest in “the next generation of roads, bridges, railways, tunnels, sea ports, and airports.” But that’s not the President’s plan.

Instead, what President Trump will outline is a blueprint for cronyism: An infrastructure proposal illegally developed in secret that is designed to further enrich people like President Trump, his business associates, and his friends.

The proposal, details of which have been slowly leaked to the press, follows months of closed-door meetings by President Trump’s “Infrastructure Council,” a group of well-connected individuals tasked by the President to design and direct federal infrastructure policy. Members of the Infrastructure Council are long-time friends and business associates of President Trump and his family, are unfettered by conflict-of-interest rules designed to prevent corruption, and stand to benefit from the President’s infrastructure policies.

We’ve already seen the consequences of President Trump’s decision to outsource infrastructure policy-making to his financially-conflicted friends. Over the past year, the Administration has quietly taken actions that benefit financiers and developers like those on President Trump’s Infrastructure Council. The Trump Administration rolled back federal flood regulations that a Council member’s development firm lobbied against; gutted pipeline safety rules that were cited as financial risks to a company owned by a Council member’s private equity firm; halted an industry-opposed federal initiative that promoted local hiring in infrastructure projects; and is rolling back protections for children exposed to lead in federally-subsidized apartment buildings, including ones owned by the Trump and Kushner families.

President Trump’s infrastructure plan is the capstone of these efforts. The plan appears to allow the Administration to award new infrastructure grants directly to private companies, empower companies to charge tolls and fees on America’s roads and bridges, cut career officials and agency experts out of project and permitting decisions, and eliminate regulatory and legal safeguards that protect against corruption.

As Congress and the public consider President Trump’s infrastructure proposal, they should consider the illegal way the proposal was crafted behind closed doors, the self-dealing infrastructure actions President Trump has already taken, and the ways in which the plan is ripe for abuse. Then they should ask a simple but critical question: Who would President Trump’s plan benefit, and who would it hurt?

As this report will detail, the answer to that question is clear: President Trump’s infrastructure strategy would leave American communities behind, as private special interests like his friends and business associates get rich.

Part 1: An Illegal Plan Developed Behind Closed Doors

In January 2017, President Trump established an “Infrastructure Council” to advise the White House and the Department of Transportation (DOT) on developing and implementing federal infrastructure policy.

The Infrastructure Council — led by New York real-estate moguls and Trump associates Richard LeFrak and Steven Roth — operated behind closed doors for months, holding secret meetings, soliciting and reviewing project proposals, recommending regulatory actions, all leading up to President Trump’s infrastructure proposal.

The Infrastructure Council’s work and the actions taken by President Trump at the Council’s recommendation were done in violation of the Federal Advisory Committee Act (FACA).

President Trump’s Illegal Infrastructure Council

The Trump Administration has made a practice of outsourcing policy making to private individuals, particularly President Trump’s business associates and friends, who are unfettered by conflict-of-interest rules and other public accountability standards. This practice, by which the Administration converts private wish lists into government policy, raises a host of ethical and legal concerns.

In January 2017, President Trump employed this approach to address the nation’s infrastructure needs, establishing an Infrastructure Council to advise himself and DOT on matters related to infrastructure policy.

President Trump named Richard LeFrak and Steven Roth to lead the Council. LeFrak is a billionaire New York real estate developer and personal friend of the President. Roth is the CEO of Vornado Realty Trust—one of New York’s largest landlords and a business partner of the Trump Organization. Both LeFrak and Roth own development projects that stand to benefit from the President’s infrastructure policies. The Infrastructure Council also included Joshua Harris and William E. Ford, two private equity executives.

As part of the mandate, the Infrastructure Council was tasked with making regulatory policy recommendations to President Trump, reviewing incoming project proposals, and helping the President develop his infrastructure proposal.

The council carried out these tasks for months, largely in secret:

  • In February 2017, LeFrak met with President Trump at Mar-A-Lago to discuss funding for a proposed wall on the southern border of the United States.
  • On March 8, 2017, the White House held a meeting on infrastructure with President Trump, Transportation Secretary Chao, and members of the Infrastructure Council, including LeFrak, Roth, Harris, and Ford.
  • Following the March 8th meeting, LeFrak told Reuters the Infrastructure Council was considering a pilot program to speed up proposals and halt litigation that delays infrastructure projects. In August, the President issued an executive order that, according to Construction Dive, seemed “inspired” by the recommendation.
  • President Trump’s first budget proposal, released in March 2017, reflected the importance of the Infrastructure Council. The budget defunded established federal infrastructure programs in favor, according to Crain’s New York, “of putting the Roth and LeFrak-led council in charge of what could be $1 trillion of federal infrastructure spending.”
  • At a town hall on April 8, 2017, President Trump highlighted that he was working with Roth and LeFrak, and that the Infrastructure Council they led would “cut a lot of red tape.”
  • In May 2017, during an interview with Secretary Chao, LeFrak told CNBC that the Infrastructure Council was hard at work. Chao also thanked LeFrak and fellow council members Steve Roth, Josh Harris, and Bill Ford for “giv[ing] up their time and their life’s experience and finding the best way to build our infrastructure for the future.”
  • As of May 11, 2017, the White House had received more than 500 infrastructure project requests from governors, consultants, contractors, unions, and advisors. According to President Trump, the Administration was “going to run projects through” the Infrastructure Council.
  • On June 7, 2017, LeFrak joined Special Assistant to the President for Infrastructure DJ Gribbin at a speech given by President Trump on infrastructure.
  • On August 11, 2017, LeFrak, Roth, and Secretary Chao exchanged emails regarding the Administration’s approach to the Gateway Program. Both LeFrak and Roth stand to benefit financially from the project. In the email exchange, Secretary Chao forwarded the advisors a Weekly Standard article that described New York Senator Chuck Schumer as “need[ing] her” to secure funding for the project. Roth responded, saying: “You are doing great. Stick to your guns.” The exchange suggested that the Administration was taking a firm public stance against funding Gateway in order to use the project as leverage in future infrastructure negotiations.

After the Infrastructure Council had been operating illegally for nearly half a year, President Trump attempted to formalize the Council’s operations by issuing Executive Order 13805, which purported to “create” the Council on July 19, 2017. But the Council’s formal operation was short-lived. After the President’s controversial remarks in support of attendees at a white supremacy march in Charlottesville, Virginia, the White House announced it would not move forward with formalizing the Infrastructure Council.

Download full version (PDF): A Blueprint for Cronyism

About Democracy Forward
democracyforward.org
“With a team of experienced litigators, researchers, and policy experts, Democracy Forward scrutinizes Executive Branch activity across policy areas, challenges unlawful actions through litigation, and educates the public about improper government activity. We believe that whenever the Executive Branch pursues unlawful policies or violates the rules, our democracy suffers and real people are hurt. Democracy Forward was created to fight back and ensure those transgressions do not go unnoticed or unchallenged.”

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