By Anita Kumar and Rosalind S. Helderman
Washington Post Staff Writers
Monday, January 18, 2010; A01
RICHMOND -- Hours after he was sworn in as Virginia's governor, Republican Robert F. McDonnell suffered his first defeat at the hands of the Democratic-controlled state Senate when he quietly dropped his nomination of a Cabinet secretary whose confirmation legislators threatened to block.
With no public announcement, McDonnell sent businessman James Cheng to be sworn in as secretary of commerce and trade Sunday at the Capitol in place of Robert Sledd, his original nominee who for weeks had been criticized for refusing to step down from three corporate boards.
McDonnell's concession shows the power Democrats still hold in Richmond because of their majority in a single chamber of the General Assembly. Even with a Republican sweep of statewide offices in November and an expansion of the GOP majority in the House of Delegates to 61 seats, the Democrats' thin control of the Senate gives them a veto power over McDonnell's agenda.
"I'm pleased that our new governor responded to the concerns of the Senate," said Sen. Janet D. Howell (D-Fairfax), chairwoman of a key committee that would have held hearings on Sledd's confirmation this week. "I think the lesson is that we're all learning how to deal with divided government. It's been divided for some time, but it's a different configuration now. Everybody is going to be learning how to adjust."
McDonnell enters office with an ambitious agenda to expand the number of charter schools in Virginia, craft tax credits for job-creating businesses, offer a merit-based pay scale for teachers and consolidate or privatize government services.
But many of his plans will require legislative approval and could be thwarted by determined opposition in the Senate. Still, McDonnell and senators have pledged to cooperate, and Democrats said their opposition to Sledd should not be read as an indication that they plan to block McDonnell at every turn.
McDonnell announced in a statement Sunday that he had named Sledd to be an unpaid senior economic adviser, an undefined position that does not require legislative confirmation.'Disappointed'
"I'm obviously disappointed we were running into such significant opposition from some members of the Senate,'' McDonnell told reporters after his Cabinet had been sworn in. "We're going to have plenty of other battles to fight on education, the budget and so forth, and this is one that resolves itself in a good way."
If Democrats had rejected Sledd, it would have been only the second time that a gubernatorial nominee was not confirmed in Virginia. Four years ago, Republicans rejected a labor secretary nominee of McDonnell's predecessor, Timothy M. Kaine (D).
McDonnell's actions Sunday sidestepped Democrats' concerns over Sledd's potential conflict. But some ethics experts say Sledd's role as a close adviser could potentially create problems if he has responsibilities similar to those he would have held as commerce secretary. Sledd will remain on the three boards.
Bob Edgar, president of Common Cause, a nonpartisan group in Washington that monitors government ethics issues, said that McDonnell made the correct decision but that the new setup should be monitored to ensure that Cheng, who was expected to be Sledd's deputy, will not be his "puppet."
Senate Majority Leader Richard L. Saslaw (D-Fairfax) acknowledged that McDonnell was circumventing the Senate but said: "It's far different than overseeing a huge series of government agencies, where the conflict is more likely to come. I can't see his advice in this area probably creating much of a conflict. He doesn't have the regulatory control as senior adviser that he would as secretary."
Officials at the governor's office continue to maintain that service on corporate boards is "legal and permissible" but said that that all of McDonnell's Cabinet appointees have voluntarily withdrawn from any directorships they held. Board membership would not violate Virginia law, but it is a practice banned by the federal government and some states.
Cheng has resigned from two boards. The new nominee has more than 20 years of experience in the fields of information technology and government contracting. He served most recently as the president of Totus Lighting Solutions, an energy-efficiency start-up.
Reached at his Richmond home Sunday, Sledd said McDonnell gave him a choice late last week to "fight the battle" in the Senate or take the new position. He said both agreed that he should take the job of senior adviser, where he will have an office alongside McDonnell in the Patrick Henry Building and work with several agencies. "I did not want to be disruptive to the new administration,'' he said.
Sledd serves on the boards of three large, global companies: tobacco giant Universal Corp. and Owens & Minor, a medical supply company, both based in Virginia, and Pool Corp., a wholesaler of swimming pool and spa equipment, based in Louisiana.Compromise floated
McDonnell's office floated a deal to leading senators in which Sledd would resign from the boards of the two Virginia companies but remain a director of the Louisiana company, according to several sources familiar with the proposal. But the senators rejected the offer, saying any board service represented an ethics problem.
Sledd said that he refused to step down from Pool Corp. because the company does less than 1 percent of its business in Virginia, and he could see no conflict. He said that legislators recuse themselves if there is a conflict and that he would have done the same but that the senators were employing a "double standard."
"I hope as we move forward we can put partisan politics last,'' he said.
Sledd's economic-interest forms filed last week with the state show he has hundreds of thousands of dollars of stock in companies, including $50,000 to $250,000 each in Universal and Owens & Minor. He had offered to put the assets in a blind trust if he served as commerce secretary.
Sledd, the former chief executive of Performance Food Group in Richmond, said he wanted to remain on the boards so he could continue to donate the $200,000 in salaries he receives to charity.