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Despite President Bush’s election to a second term, changes are coming to federal agencies important to dealmakers. Assistant Attorney General R. Hewitt Pate and Federal Communications Commission Chairman Michael Powell are both expected to depart by spring. Each has served in the administration since Bush defeated Al Gore in 2000, which is considered a long tenure for a political appointee. How Bush chooses to fill those posts could have a significant impact on competition policy, especially in the media and telecommunication industries. The question under debate is whether he will seek mainstream candidates or push for more of an extremist. Several politically connected antitrust experts said they expect Bush will opt for continuity with current public policy, going with replacements for both jobs that Republicans and Democrats will find acceptable. “I don’t think the Cato Institute will take over the antitrust world,” said James Rill, a partner at law firm Howrey, Simon, Arnold & White in Washington and the assistant attorney general for antitrust in George H.W. Bush’s administration, alluding to the libertarian think tank. At the Department of Justice, leading contenders to succeed Pate are several of his deputies, including Bruce McDonald, Tom Barnett and Makan Delrahim. Several sources gave the edge to McDonald, the longest serving of the three. All are considered within the bounds of the bipartisan consensus on antitrust enforcement, suggesting the status quo would remain. Several outsiders also are possible. Tom Rosch, a partner at law firm Latham & Watkins who was considered for the top job when Charles James resigned in 2002, could surface again. That would be particularly ironic because he was a lead lawyer defending Oracle Corp. in the government’s challenge to the company’s hostile bid for PeopleSoft Inc. Also mentioned is Alison Smith, a former antitrust deputy in the elder Bush’s administration; she is from Texas. But one cannot rule out the possibility of a more radical change at the antitrust division. Several groups ranging from Cato to the Association for Competitive Technology have blasted the government’s current approach to antitrust, arguing that enforcers should permit far more consolidation. Experts said Bush could choose candidates that subscribe to this more conservative view. At the FCC, Powell is expected to serve for up to six more months before ending what has been nearly a decade of public service in the civilian sector that included stretches as chief of staff at the Department of Justice antitrust division and as an FCC commissioner during the Clinton administration’s second term. Leading contenders to replace him share his de-regulatory bent, though they are unlikely to force through radical changes to media ownership limits or telephone competition regulations. Republican Commissioner Kevin Martin, who served on the Bush-Cheney transition team in 2000 and who was deputy general counsel for that campaign, is expected to be considered for the top position despite a dispute with Powell over a change to a telecommunications regulation that soured relations between them. Blair Levin, a policy analyst at Legg Mason Inc. in Washington, said a Martin-run FCC would be more politically savvy, which suggests he could have more success at easing merger limits. Martin also is more likely than Powell to favor rival telecom firms over the regional Bell companies. Another possible replacement is Rebecca Armendariz-Klein, a former chair of the Texas Public Utility Commission. On Tuesday, Klein lost her bid for the House seat in Texas’ 25th district. She was a telecom policy adviser to Bush when he was Texas governor. Michael Gallagher, director of the National Telecommunications and Information Administration, a unit of the Department of Commerce, also could be chosen to head the FCC if Powell leaves. Others in the running could be former NTIA director Janice Obuchowski, a Washington consultant, and Earl Comstock, a telecom attorney with Sher & Blackwell. Comstock served as a special telecom counsel for the Senate Commerce Committee between 1995 and 1996, when Congress drafted key provisions of the Telecom Act of 1996. One election loser is Jonathan Adelstein, a Democrat whose FCC term expired in June 2003. He must leave office when Congress adjourns this year unless renominated. Sources do not expect that to occur. Levin said he expects Bush to package together replacements for Powell, Adelstein and Kathleen Abernathy, whose term expires in June. Linking nominations of Democratic and Republican members of government commissions is common because it tends to limit political hurdles to confirmation. The president’s re-election should secure the future of FTC Chairman Deborah Majoras and Commissioner Jon Leibowitz, both of whom are serving recess appointments that expire when Congress adjourns in 2005. Change at the Securities and Exchange Commission appears to be at least a year away. Sources said that by fall of 2005 SEC Chairman William Donaldson may be ready to leave the agency, whose reputation he helped salvage in the wake on the Enron Corp., WorldCom Inc. and other scandals. “The luster starts dimming after three or four years — I can’t see him sticking around,” one Washington insider said. Others said Donaldson could feel pressure to at least serve out his term, which expires in June 2007. That’s because finding a candidate acceptable to business leaders and Congress could be difficult. Replacing Donaldson may be “more political controversy than they need right now,” said John Coffee, a securities law professor at Columbia University Law School. An SEC spokesman said Donaldson has consistently downplayed talk of his departure. “He plans to stay as long as he believes he can make a contribution and as long as the president wants him to,” the spokesman said. Ron Orol, Shanon D. Murray and Donna Block contributed to this report. Copyright �2004 TDD, LLC. All rights reserved.

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