Agency Ignored Constitutional Questions About Trump Hotel Lease, Report Finds The Trump International Hotel in Washington is at the center of a debate about the Constitution’s restrictions on government-bestowed benefits. or “emoluments.”
The inspector general for the agency, the General Services Administration, found that its lawyers agreed that Mr. Trump’s election raised constitutional issues about the Trump Organization’s lease of the building on Pennsylvania Avenue, which was redeveloped as the Trump International Hotel. The lease was signed in 2013 and the hotel opened two weeks before the 2016 election.
But rather than confront head-on after Election Day what to do about the issue — or seek the advice of the Justice Department — the agency ignored it, the report said. Essentially, the General Services Administration decided to “punt,” the report said, quoting a senior agency lawyer, effectively clearing the way for Mr. Trump’s business to continue operating in the heart of the capital.
The inspector general’s report suggested that the intersection of Mr. Trump’s business with his role as president might violate the Constitution’s restrictions on government-bestowed benefits or “emoluments” to federal officials, besides their salaries.
“We found evidence that the term ‘emolument’ as used historically and today includes the gain from private business activities,” the report said.
The Constitution prohibits federal officials from accepting benefits or emoluments from foreign or state governments, but courts have yet to resolve what constitutes an illegal emolument. In the case of the Trump International Hotel, the issue centers on whether money spent by foreign and state governments and other entities derives from Mr. Trump’s role as president and benefits him financially.
The State of Maryland and the District of Columbia have a filed suit alleging that the president’s interest in the hotel violates the Constitution and that the hotel is drawing customers away from other hotels and convention centers in the region.
A federal appeals court will consider this spring whether the lawsuit should be allowed to proceed, a decision that will most likely end up at the Supreme Court.
The inspector general’s report cited “serious shortcomings” in the General Services Administration’s decision-making, noting that the “G.S.A. has an obligation to uphold and enforce the Constitution.” It was the lawyers’ job to consider whether Mr. Trump’s rise to the White House resulted in a breach of the lease, the report said.
The agency’s deliberation spanned several months before and after Mr. Trump took office.
Fearing public controversy, which might damage the government’s financial interests, the agency did urge that Mr. Trump divest himself of his financial interest in the property in a Jan. 31, 2017, meeting with his oldest sons, Donald Trump Jr. and Eric Trump, the report said. After his election, Mr. Trump turned management of the business over to them.
The contracting officer on the case “pushed hard for divestiture” in that meeting, but did not insist upon it because he did not believe that the new president’s interest in the property, a historic building known as the Old Post Office, created a problem that constituted a breach of the lease, the report said.
Two months later, the contracting officer, Kevin Terry, issued a certificate declaring that the Trump Organization was in full compliance with the provisions of the lease and that the lease was “valid and in full force.” Although Mr. Terry knew the constitutional issue was open, “nonetheless, he did not qualify his certification,” the report said.
Agency officials acknowledged that they may be forced to revisit the lease, depending on what the courts decide. But the inspector general, Carol F. Ochoa, noted that the agency has already agreed with the Trump Organization that President Trump’s interest does not violate the lease’s language prohibiting profits to elected officials. The report identified that as a “problem.”
It recommended that the agency’s lawyers conduct a “formal legal review” on how the emoluments bans relate to the agency’s business.
In his response to the report, Jack St. John, the General Services Administration’s general counsel, said he was “gratified” that the inquiry found no evidence of political interference in the agency’s decision-making.
“In fact, your office found no undue influence, pressure or unwarranted involvement of any kind by anyone, including the Executive Office of the President,” he wrote in response to the inspector general.
He added, “Any commentary resulting from the report that suggests the agency took any action in order to protect the president’s business interests is therefore plainly meritless.”
Under a 60-year lease signed in 2013, Mr. Trump’s family business pays the General Services Administration, which oversees all federal property, at least $3 million a year in rent for the building. Part of the hotel’s business comes from foreign diplomats, state officials and other guests seeking meetings with the White House. Mr. Trump also used it for some of his inaugural events.
A version of this article appears in print on Jan. 16, 2019, on Page A12 of the New York edition with the headline: Question On Leasing Properties Was Ignored.
By Jessica Levinson, professor at Loyola Law School
As 2018 gets underway, many are continuing to look for ways to remove President Donald Trump from office. Recently, some Trump critics had staked their hopes on an arcane, little-known and virtually impossible-to-pronounce Constitutional provision known at the emoluments clause. But thanks in part to a recent federal court decision, we may never know what the clause means. While the court battles will continue, it now seems likely that the emoluments clause will not be the legal vehicle that ushers Trump out of the Oval Office.
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The hurdle facing the plaintiffs in all of the suits is the same — something called “standing.” If you want to sue in federal court, you (as a person, an organization or a representative of the government) need standing. This means you had an actual or imminent injury which is concrete and particularized. You can’t just march into federal court and say “I was harmed.” You have to show a specific type of harm and demonstrate that if you win, that harm will be remedied.
CREW’s suit ultimately failed based on lack of standing. CREW found people who work at businesses that compete with Trump’s businesses and claimed that they’re unfairly losing business because foreign officials are now using, staying, or eating at Trump’s businesses instead of their businesses.
The judge’s opinion boiled down to the idea that CREW’s plaintiffs couldn’t show that their economic injury was caused by a violation of the emoluments clause, and they could not show that if they won, that would have the effect of solving their injury.
The judge also said this issue is one best left up to the legislative branch, not the judicial branch. Noting that Congress has the power to consent to behavior that would otherwise violate the clause, the judge held that members of Congress, not judges, should determine when there is a violation.
The standing doctrine may well sound the death knell to the other two cases based on the emoluments clause.
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