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Citing an economic ‘emergency,’ Trump directs agencies across government to waive federal regulations

The Washington Post logo The Washington Post 6/5/2020 Steven Mufson, Juliet Eilperin, Jeffrey Stein, Renae Merle
Ben Carson et al. posing for the camera: President Trump, flanked by Secretary of Treasury Steven Mnuchin and Secretary of Housing and Urban Development Ben Carson, signs an executive order limiting regulations to support economic recovery on May 19 at the White House. © Jabin Botsford/The Washington Post President Trump, flanked by Secretary of Treasury Steven Mnuchin and Secretary of Housing and Urban Development Ben Carson, signs an executive order limiting regulations to support economic recovery on May 19 at the White House.

The Trump administration is doing by fiat what it has struggled to accomplish through lengthy rulemaking: dismantle federal regulations designed to protect workers, consumers, investors and the environment.

Invoking an economic “emergency” stemming from the coronavirus pandemic, the administration has made it harder for people to challenge inaccuracies on credit reports, eased required breaks for commercial truckers, told factories and power plants that they should obey pollution limits but did not have to monitor or report their emissions routinely, among other things.

President Trump formalized this strategy two weeks ago when he signed an executive order instructing agencies across the government to rescind, modify or simply stop enforcing regulations if they burden the economy. On Thursday , he signed another order to allow agencies to waive 50-year-old environmental laws to speed federal approvals of pipelines, highways, and other projects. 

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The president took the actions even as he celebrated a 13.3 percent unemployment rate Friday and said the economy was surging in “the greatest comeback in American history.”

His executive orders have resurrected a long-running debate about whether regulation hurts the economy.

“This is a huge win for pro-growth policies,” said David McIntosh, president of the Club for Growth, in a recent call with reporters.

The moves come on top of waivers that federal agencies had already granted businesses and industries earlier in the health crisis. The White House will seek to make many of those roughly 600 deregulatory actions permanent, according to a former White House official speaking on the condition of anonymity to talk frankly.

As the virus spread across the United States earlier this year and the economy cratered, officials looked for places to pare back.

The federal consumer watchdog agency suspended requirements that financial institutions investigate disputed information on consumers’ credit reports. The Department of Labor relaxed some worker protections, including how businesses report paid sick leave. The Food and Drug Administration cut the time it takes to approve new antimicrobial products from years to months.

Major conservative groups and trade associations, which decry many federal regulations as overreach, are rushing to present even more ideas. These include setting aside labor requirements on infrastructure projects; speeding up vaccine and treatment approvals; limiting corporate liability; lifting restrictions on telemedicine so people can see doctors across state lines; and loosening wetlands protections so farmers can install stocked fish ponds or other features.

a man standing in front of a sign: EPA administrator Andrew Wheeler speaks in Lebanon, Tenn. in 2018 after meeting with farmers about new Trump administration proposals to redefine “waters of the United States.” © Mark Humphrey/AP EPA administrator Andrew Wheeler speaks in Lebanon, Tenn. in 2018 after meeting with farmers about new Trump administration proposals to redefine “waters of the United States.”

But others warn that the president is overstepping his authority, and the executive orders will collapse in the face of legal challenges.

“The good news is that the president has once again assumed he possesses absolute power to say what the law is, but he does not,” said Richard Lazarus, a Harvard University professor of environmental law, in an email. “That is the job of the courts, and they will reject the president’s effort to sweep away critically important public health protections enacted by Congress and signed by prior Republican and Democratic presidents.”

Still, even if interest groups battle rollbacks in court, federal officials could just stop enforcing some regulations, said New York University School of Law professor Richard Revesz. “Agencies have a fair amount of discretion of when to bring enforcement actions,” he said.

For more than a century, Congress has created agencies and regulations to oversee activities it didn’t have the expertise to handle, mostly to protect the public.

In 1887, for example, the federal government established the Interstate Commerce Commission to manage the exorbitant rates railroads were charging farmers and merchants. The first federal mine safety statute passed in 1891, and Upton Sinclair’s portrait of the unsanitary meatpacking industry in “The Jungle” spurred the creation of the Food and Drug Administration in 1906. Other regulations do everything from protecting competition to bolstering financial stability to requiring equipment to make offshore oil spills less likely.

Trump’s executive order in May, however, freed the agencies from enforcing regulations that “may inhibit economic recovery” on a temporary or permanent basis.

“The point is to tell the agencies not to throw the book at someone acting in good faith,” said a senior administration official who spoke on the condition of anonymity to describe internal thinking about the policy.

The order Thursday directed agencies to waive requirements imposed by laws such as the Endangered Species Act and the National Environmental Policy Act if that could accelerate the construction of highways, pipelines and other projects. These laws require agencies to solicit public input on projects proposed in their communities and analyze in detail how they could potentially harm the environment.

The president said he was acting because of dire economic circumstances brought on by the pandemic. But his desire to weaken the 50-year-old National Environmental Policy Act predates the eruption of coronavirus in the United States. In early January, he railed against the law and proposed fundamental changes to weaken it.

One sign of industry’s appetite for regulatory relief can be seen on the state level in Minnesota, where pollution regulators have received more than 500 requests for “regulatory flexibility” because of covid-19 and been granted more than 93 percent of them.

Donald Trump wearing a suit and tie: President Trump signs an executive order on regulations on Tuesday at the White House. On Wednesday, he threatened to withhold federal aid from states that send out applications for mail ballots. © Jabin Botsford/The Washington Post President Trump signs an executive order on regulations on Tuesday at the White House. On Wednesday, he threatened to withhold federal aid from states that send out applications for mail ballots.

As early as his first month in office, Trump made it clear he wanted to shrink regulation, directing agencies to identify two regulations to be repealed for every new one proposed.

The Consumer Financial Protection Bureau, which guards consumers from abusive payday lenders, mortgage brokers, banks and other financial institutions, had already reduced its enforcement activities before the pandemic. Under Barack Obama, the bureau filed an average of 3.1 cases a month over nearly six years. It has filed about half that number under President Trump since the beginning of 2018.

In April, the bureau said it would not punish banks, debt collectors and other financial companies for violating provisions of the Fair Credit Reporting Act that require them to investigate disputed information on consumers credit reports. It means consumers who see problems on their credit reports will have less recourse.

The bureau’s more relaxed approach comes despite the fact it has received a record numbers of complaints — about 36,700 in March and 42,500 in April. In the eight weeks after Trump declared a national emergency in March, the average number of complaints about prepaid cards and credit reporting increased 84 percent and 29 percent respectively compared with the previous eight weeks.

At EPA, the top enforcement official, Susan Bodine, said in a March 26 memo that her agency “will exercise the enforcement discretion” for “noncompliance” resulting from the covid-19 pandemic.

At the Department of Labor, White House officials have discussed letting firms disregard reporting requirements written into the brand new paid sick leave benefits approved by Congress, said Karen R. Harned, executive director of the NFIB Small Business Legal Center, a trade group. Lawmakers created the benefits in February to allow employees working from home to collect a paycheck should they become sick with covid-19.

Small business groups have also talked with the White House about paring back regulations related to overtime pay, given the surge of employees working remotely, Harned said.

“As employees are trying to get back to work, this is not the time to be bringing down the hammer on someone who forgot to dot an ‘I,’ ” Harned said. ““We have been hoping they can really use their enforcement discretion.”

The Heritage Foundation had already proposed reversing a rule that took effect in January and extended overtime pay to another 1.3 million workers.

The Labor Department has already moved to broaden an exemption for paid leave benefits for firms with fewer than 50 employees.

A Labor Department official said in an email that it plans to keep the rule in place, but added, “DOL is always considering ways to reduce unnecessary regulatory burdens, especially as the economy reopens.”

“It’s hard to imagine how anything with respect to sick days and DOL’s regulations could be any weaker,” said Vicki Shabo, a senior fellow at New America, a left-leaning think tank. “The regulations already require very little of employers and give them a lot of discretion, particularly around smaller businesses. The idea you would further weaken these restrictions in the middle of a pandemic seems irresponsible and counter to public interest.”

Donald Trump, Jerome Adams, Deborah Birx are posing for a picture: President Trump listens as FDA Commissioner Stephen M. Hahn speaks during a briefing with his coronavirus task force in March. © Jabin Botsford/The Washington Post President Trump listens as FDA Commissioner Stephen M. Hahn speaks during a briefing with his coronavirus task force in March.

The banking industry, for its part, has secured significant regulatory rollbacks since the virus outbreak began and is now pushing to make some permanent.

The $2 trillion economic rescue package passed by Congress in March delayed implementation of new accounting standards by two years and temporarily lowered the amount of capital small banks, those with less than $10 billion in assets, must hold to ensure they can survive an economic downturn.

Banks had called for both changes long before the pandemic and have already begun lobbying to make some of the rollbacks permanent.

“With all of these temporary changes, I am deeply skeptical policymakers are going to allow any of them to expire,” said Jeremy Kress, an assistant professor of business law at the University of Michigan who researches financial regulation.

For big banks, financial regulators stepped in to offer relief in April when the Federal Reserve temporarily relaxed a key “leverage ratio” used to measure how much of a financial buffer banks need to absorb losses during an economic downturn. The Fed’s rollback lowered the amount of capital big banks must hold by $76 billion. Other regulators followed with similar concessions in May.

The rule change “will provide flexibility” so banks can “provide credit to households and businesses in light of the challenges arising from the coronavirus response,” the FDIC said.

“That is a massive sea change in how we have always thought about the leverage ratio,” Kress said. “It is going to be very hard to undo them.”

The Department of Transportation has already issued sweeping waivers from safety rules for truckers and railroads to help goods move around the country. Since March, the Federal Motor Carrier Safety Administration has stopped enforcing rules that cap truckers’ work day at 14 hours, with a maximum 11 hours behind the wheel if they are carrying essential supplies.

In May, the agency also finalized rules that eased mandatory breaks for truckers during work and between shifts.

“What we have done is to selectively look at regulations that are overly intrusive and burdensome,” Transportation Secretary Elaine Chao said.

a group of people standing in front of a building: President Trump delivers remarks during a “celebrating America’s Truckers” event on the South Lawn at the White House in April, praising the work they have done during the pandemic and announcing regulatory relief from the profession. © Jabin Botsford/The Washington Post President Trump delivers remarks during a “celebrating America’s Truckers” event on the South Lawn at the White House in April, praising the work they have done during the pandemic and announcing regulatory relief from the profession.

Cathy Chase, the president of Advocates for Highway and Auto Safety, opposes using the unusual experience on the roads during the pandemic as a basis for making long term changes to truck safety rules, because there has been relatively light traffic.

“That would be using data from a time when our nation is in crisis to further an economic agenda by some segments of the trucking industry,” Chase said.

While many agencies have outlined how they might ease federal requirements in response to the executive order, others — including Health and Human Services, FDA, Interior and EPA — refused to specify their plans.

At the Education Department, officials are considering extending a rule change that allows school districts to carry over unspent dollars targeting low-income students into the next year and another that has allowed using professional development funds for online instruction.

When — and if — the administration reverts to established regulatory enforcement depends on the economy, but not that alone.

Restoring regulations “needs to be timed so that they don’t stop the recovery with lot of costs and regulations,” McIntosh said. “What we’ve urged administration to do is use that end phase to evaluate whether these regulations are really needed.”

Ian Duncan, Amy Goldstein, Chelsea Janes and Laura Meckler contributed to this report

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