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Trump’s possible pick for FTC chair might have to recuse himself in cases involving Google, Facebook or Microsoft


Utah's Attorney General, Sean Reyes
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Utah's Attorney General, Sean Reyes

Utah Attorney General Sean Reyes, considered one of the leading candidates for chairman of the Federal Trade Commission, has over the course of his campaigns received more than $60,000 in contributions from tech companies such as Facebook, Microsoft and Google.

That means if President Donald Trump appoints Reyes to the FTC, there's a chance Reyes would have to recuse himself from cases involving those companies, according to a source close to the FTC. Other FTC experts said the federal agency had little or no experience in dealing with commissioners who have received campaign contributions and if that would put him under pressure to recuse himself from cases.

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It's still unclear if ethics regulations would apply in the case of campaign contributions, but experts say the issue for Reyes would come down to any appearance of conflict.

As Utah's attorney general, Reyes reported $2.2 million in campaign contributions going back to his first campaign in 2012, according to the office of the Utah Lieutenant Governor. He received roughly $1.9 million of those donations between 2014 and 2016.

Of contributions between 2014 and 2016, he received a total of $25,000 from Facebook, $15,000 from Comcast*, $7,200 from Microsoft, $3,000 from Yelp, $2,500 from Google and at least $10,000 from a batch of other tech companies, according to campaign finance disclosures.

Google and Yelp declined to comment for this story. Comcast and Microsoft did not respond to requests for comment. Facebook directed Recode to its political engagement report.

What makes this a potentially unusual circumstance for the FTC is it typically hasn't seen former politicians serving on the agency. If appointed, Reyes' past political life could complicate FTC cases going forward.

Reyes' campaign consultant, Alan Crooks, told Recode, "We haven't reviewed any of those things at this time," referring to the contributions from tech companies. "We'll take a look at it if he's actually called to be FTC chair."

The FTC declined to comment for this story.

The commission is one of two key federal institutions, alongside the Department of Justice, with the authority to pursue antitrust action against companies, making it a focal point in watching how the Trump administration handles regulatory policies and actions of significance to the tech industry.

Reyes gained attention after sources told Politico he was a top candidate for the role of chairman of the commission. Acting chair Maureen Ohlhausen has also gained support as a possible permanent appointee. Both are Republicans.

In recent years, lobbyists have aggressively pursued attorneys general with campaign contributions to act in favor of their corporate clients, according to a 2014 investigation in the New York Times. The draw is that attorneys general typically face fewer restrictions and disclosure requirements than other elected officials.

A commissioner involved in cases pertaining to companies that contributed to his political campaigns would create "an appearance of impropriety," a source close to the FTC told Recode.

"The issue of running campaigns and the political contributions that are part of those campaigns presents some unique issues for the Federal Trade Commission in terms of recusals on the one hand, and in terms of appearances on the other hand," this person said.

But another source, a Washington D.C. lawyer who used to work for the commission, told Recode campaign contributions are "just part of the fabric of our political system." The person pointed out that appointed roles at other federal institutions have been filled by former politicians. Hillary Clinton, for example, was appointed Secretary of State after serving as senator from New York.

"Suggesting that there's a problem with this is really taking on the issue [of campaign contributions] generally," the source said.

This isn't the first time questions have been raised about Reyes having an appearance of bias regarding tech companies.

As attorney general, Reyes signed a letter a year ago suggesting the FTC revisit an investigation closed in 2013 into whether Google unfairly skewed search results to favor Google products. In the run-up to the nomination of an FTC chairman, companies engaged in conflicts with Google, including Yelp, have made efforts to promote his appointment, according to the Wall Street Journal.

It should be noted that in addition to taking money from Google, Reyes has also taken money from Yelp, which has criticized Google for what it sees as anticompetitive practices.

Whether Reyes would be pressured to recuse himself in cases involving companies that have contributed to his campaigns depends on an interpretation of the Code of Federal Regulations. The code's ethics standards for executive branch employees requires them to "avoid an appearance of loss of impartiality" in doing their jobs.

Failure to avoid the appearance of bias could result in a court decision being tossed, according to Wayne State University law professor Stephen Calkins, who served as general counsel to the FTC in the late '90s. "At some point an affected party could claim that due process rights were violated," he wrote in an email.

In Reyes' case, if the rule applied, Calkins said it would likely involve a part of the code which he describes as "vague, more general."

The line states: "An employee who is concerned that circumstances other than those specifically described in this section would raise a question regarding his impartiality should use the process described in this section to determine whether he should or should not participate in a particular matter."

A previous FTC commissioner recently recused himself in cases involving Google, but for different reasons. Joshua Wright, who left the FTC in 2015, recused himself from matters involving Google because he had accepted funding from the company for some of his previous research papers. The Law and Economics Center at George Mason University, where Wright was a professor, received $762,000 in donations from Google from 2011 to 2013, according to Salon.

But Wright's recusal likely stemmed from a different part of the federal code and may not apply to Reyes, according to Calkins.

It's difficult to predict how ethics standards would be applied to Reyes because the FTC has rarely, if ever, had to consider ethics surrounding campaign contributions, Calkins said. Historically, it's rare for the commission to appoint members who have held elected office.

Seattle University School of Law professor John Kirkwood, who worked for the FTC for 25 years, said he couldn't recall a single commissioner who had previously been an elected official. "I doubt the FTC has much, if any, experience deciding whether a political contribution requires recusal," he wrote in an email to Recode.

Calkins identified one commissioner who held a seat in Congress before joining the FTC — John Gwynne, who was appointed to the commission in 1953. Calkins did not look into earlier commissioners.

Reyes has faced questions about the impact of campaign contributions on his actions as attorney general in Utah. In 2015, critics raised concerns about a $5,000 contribution Reyes received from contact lens company 1-800 Contacts, which benefited from a law he was defending.

Reyes' campaign consultant Crooks told the Associated Press the contribution was consistent with past donations from the company, and that Reyes was required as attorney general to defend any laws passed in the state.

The company, 1-800 Contacts, is currently fighting a lawsuit waged against it by the FTC alleging anticompetitive practices, as the New York Post previously reported.

By Tess Townsend, Re/code.net.

CNBC's parent NBCUniversal is an investor in Recode's parent Vox, and the companies have a content-sharing arrangement.