Key Democrat seeks inspector general probe into FAA chief’s airline stock divestment

The Senate Commerce Committee’s top Democrat is calling on the Transportation Department’s independent watchdog to launch an investigation into whether Federal Aviation Administration Chief Bryan Bedford “profited from deliberately violating his ethics agreement” by not divesting from an airline company — which he once ran — during a stipulated time frame last year.

Bedford had vowed in that agreement to dispose of his equity in the parent corporation of Republic Airways, the regional carrier he presided over before joining the Trump administration, within 90 days of being confirmed to head the FAA. But he failed to meet that early October deadline, unloading millions of dollars in stock afterward, ethics documents he filed show.

In a Wednesday letter to acting DOT inspector general Mitch Behm, first reported by POLITICO, Sen. Maria Cantwell (D-Wash.) and other Democratic lawmakers alleged that Bedford might have intentionally breached his agreement by waiting to divest his stock until after Republic Airways Holdings completed a merger with another regional airline company, Mesa Air Group.

Sens. Tammy Duckworth (D-Ill.) and Ed Markey (D-Mass.) signed the letter, too.

“We also have serious concerns about the veracity of Mr. Bedford’s shifting explanations for violating” his pledge, the trio said. Bedford ultimately divested his shares fully by late February, disclosing that he sold between $5.5 million and $26.2 million this year.

The lawmakers asked that Behm probe if the FAA chief “made material misrepresentations to Congress or the Office of Government Ethics” and urged him to dig into whether “any disciplinary or corrective actions are warranted,” including having Bedford relinquish “any excess capital gains he has realized.”

They argued that it appears he could have sold his stock on time, adding that the reason for his “divestiture obligation is obvious”: He holds significant sway over the regional airline industry as FAA administrator.

The agency told POLITICO it will respond to the lawmakers directly and noted that Bedford has divested his stock. Republic Airways Holdings didn’t immediately respond to a request for comment.

Bedford previously defended himself during congressional testimony in December, saying, in part, that he followed career ethics officials’ advice.

He added: “I played it right down the fairway, completely transparent, open, honest about where I was at, what I was trying to accomplish.”

The inspector general’s office confirmed to POLITICO that it received and will review the senators’ letter but otherwise has no comment for now.

Bedford retired as chief executive officer and president at Republic Airways Holdings, a private firm, on July 1, according to a Securities and Exchange Commission filing. The Senate OK’d him a little over a week later.

Under the terms of his ethics agreement, Bedford committed to divesting from the company no later than Oct. 7.

But in paperwork he signed that day, first reported in November by POLITICO, Bedford said he had yet to ditch his stock. He added that he would remain recused from any matters affecting the carrier’s financial interests while he retained his equity and was seeking an extension of his deadline.

He contacted Judith Kaleta, DOT’s deputy general counsel, to request another 60 days, citing his busy work schedule.

Kaleta wrote to OGE, the federal government’s central ethics office, urging it to grant Bedford’s ask.

Then, there seemed to be a misunderstanding. In an October conversation with OGE, outlined in a later email exchange, Kaleta recalled that “it was not clear to me that [the office] had reached a formal decision on the request.”

But OGE on Dec. 1 informed Kaleta in writing that it wouldn’t grant Bedford an extension and inquired about whether he had divested, saying the office would alert the Senate to the issue. Subsequently, Kaleta argued that she had thought Bedford’s ask was still unresolved; OGE responded: “We were not aware you believed the request for an amendment was still pending. ... We conveyed being busy with your position did not constitute an ‘unusual hardship.’”

By this point, Republic Airways Holdings and Mesa Air Group had merged; the finalized deal was announced in late November. The combined carrier became publicly traded.

Kaleta didn’t immediately respond to a request for comment. Patrick Shepherd, an OGE spokesperson, in a statement said the office is “committed to transparency and citizen oversight of government” but doesn’t respond to questions about specific individuals.

Under the merger, Bedford was able to turn 16,733 private shares into “at least” 652,475 shares in the merged entity, according to the Democrats’ Wednesday letter, which cites an SEC filing.

OGE notified Senate Commerce Chair Ted Cruz (R-Texas) of Bedford’s ethics agreement violation on Dec. 8, and Cantwell expressed outrage over the matter.

During a Senate aviation subcommittee hearing later that month, Bedford faced sharp questions from some Democrats about the topic. He argued that he had simply followed the advice of career ethics officials; he was appropriately recusing himself in the meantime; and his hands were now tied due to the merger, with his stock “terminated.”

“I’m waiting for the shares to be reissued under the new organizational structure,” he said, apparently referring to the combined company, which is still called Republic Airways Holdings.

But he added: “My intention was always to complete the merger and to sell the shares in the market. That was my intention coming into government.”

His ethics agreement made no mention of this, and the Democrats’ Wednesday letter homed in on his testimony before the subcommittee.

Bedford disclosed in March that he had completed his divestment as of Feb. 20.

In a separate ethics document released in April, he noted that he had sold between $5.5 million and $26.2 million in stock in the company since the beginning of this year. Federal officials like Bedford only report transaction amounts in wide ranges.

Further complicating the situation, Bedford in that paperwork also revealed a sale of up to $5 million in stock on Oct. 21, the trio of Democrats said in their letter. This occurred after his ethics agreement deadline but before the merger was completed.

Bedford “never mentioned this transaction in his official correspondence or congressional testimony in December,” they said.

It appears, the lawmakers said, that Bedford was capable of fully divesting on time.

At close on Nov. 26, the day after the announcement of the merger’s completion, Republic Airways Holdings was trading at $21 per share. It stood at $19.75 on Feb. 20.