Phil Mattera

Crossing Party Lines to Fight Corporate Crime

The state attorneys general seem to be divided on how big a settlement they should extract from the Sackler family and Purdue Pharma to resolve a lawsuit concerning their involvement in the opioid crisis. According to one report, the split is largely on party lines, with Democratic AGs calling for a bigger payout and Republican prosecutors settling for less.

More on the diverging negotiating positions will probably come to light in the days ahead. This disagreement should not, however, obscure the bigger story: states with very different partisan orientations have been cooperating for years on cases involving corporate misconduct.

On policy issues, state AGs exhibit strong ideological tendencies. Democratic AGs have been suing the Trump Administration repeatedly over issues such as the travel ban and migrant family separation. In the same way, Republican AGs went to court to try to undermine Obama Administration initiatives such as the Affordable Care Act.

Yet in the area of corporate crime-fighting, bipartisanship is the norm.

My colleagues and I at the Corporate Research Project of Good Jobs First have been documenting this fact in the course of collecting data for the latest expansion of our Violation Tracker database. We’ve compiled more than 600 cases in which two or more state AGs successfully sued a corporation and collected monetary penalties, usually in the form of a settlement in which the company did not admit guilt.

Next week we will post the data on Violation Tracker and publish a report that analyzes the multistate AG cases. I can’t give away the main findings until then, but I can say that the new entries will make a major addition to penalty totals in the database.

Currently, there are 61 parent companies with $1 billion or more in cumulative penalties (our entries go back to the beginning of 2000). With the AG cases, that number increases to 84.

The penalty totals for many of the individual corporations, especially the big banks, will rise dramatically. The combined state and federal penalty total for Bank of America, for instance, will be in excess of $80 billion.

Although the report will focus mainly on the multistate AG cases, we also collected data on 7,000 single-state AG cases from across the country that will be added to Violation Tracker. These include lots of relatively minor consumer protection cases (crooked used car dealers and the like), but there are also plenty of major settlements, including 70 cases with corporate payouts of $100 million or more.

There have been a few state AGs who have shown less enthusiasm about pursuing corporate miscreants. One example was Scott Pruitt, when he held that post in Oklahoma before being chosen as the Trump Administration’s first administrator of the EPA.

As state AG, Pruitt brought few actions against companies on his own and did not sign on to many of the multistate cases. Fortunately, he was far from typical, even among the reddest states.

Exorcising Evil at Google

For the past two decades, Google’s Code of Conduct has included the phrase Don’t Be Evil. It used to be at the beginning of that document but now it is relegated to the end, appearing almost as an afterthought.

That turns out to be appropriate, given that Google can no longer pretend to be a paragon of virtue. The latest example of this move to the dark side is the announcement by the Federal Trade Commission and the New York State Attorney General that Google is paying $170 million to settle allegations that its subsidiary YouTube committed serious violations of the Children’s Online Privacy Protection Act. It was said to have done this by collecting personal information from under-age viewers of online videos without their parents’ consent.

Google and its parent company Alphabet Inc. will be facing more headaches. There have been recent reports that a large group of state attorneys general are getting ready to announce a major antitrust investigation of Google, whose search engine is essentially a monopoly and which has dominant positions in other areas as well.

The company has already been targeted in Europe. Last year the EU hit Google with a $5 billion fine for abusing its control over cellphone operating systems, and earlier this year the Europeans imposed a $1.6 billion penalty for abusing its control over web searches.

Google’s misconduct is not all of recent vintage. In 2012 it paid a $22 million fine to the FTC to settle allegations that it misrepresented to users of Apple’s Safari Internet browser that it would not place tracking cookies or serve targeted ads to them, violating an earlier privacy settlement between the company and the agency. The following year it had to pay $17 million to a group of three dozen state AGs to settle allegations of unauthorized placement of cookies on web browsers. Around the same time it paid $7 million to another set of AGs for the unauthorized collection of data from unsecured wireless networks across the country.

In 2014 it paid to $19 million the FTC to resolve allegations that it unfairly billed consumers for in-app charges incurred by children without their parents’ consent.

For a long time, Google promoted itself as an outstanding place to work. Yet that image has eroded as well. In 2015 it and three other tech giants had to pay $415 million to settle a lawsuit alleging that they conspired to suppress salary levels by secretly agreeing not to hire one another’s employees.

Last year Google faced an unprecedented walkout by thousands of its employees around the world who were protesting what they saw as the company’s lax treatment of sexual harassment claims.

The positive side of this is that it inspired a new form of activism among tech workers previously thought to be too individualistic to act collectively. Google employees have also been outspoken on other issues such as providing services to the repressive Chinese government.

If the evil is ever to be exorcised at Google, it will be done not by a corporate motto but by pressures brought to bear by federal regulators, state prosecutors and the company’s own workforce.

High Standards, Poor Behavior

It is amazing how much attention is being paid to the Statement on the Purpose of a Corporation just issued by 181 chief executives of large corporations under the auspices of the Business Roundtable. We are supposed to think it is a major breakthrough that big business is claiming to do more than maximize returns for shareholders.

In fact, Corporate America has long given lip service to the notion that it has an obligation to other stakeholders such as employees, communities and suppliers and that it needs to promote sustainability in its operations. The language of the Roundtable statement could have been taken from similar pronouncements that have been made by the vast majority of large companies under the rubric of corporate social responsibility or a similar phrase. The website of Exxon Mobil, for instance, contains a page on its Guiding Principles, which are said to include adherence to “high ethical standards.”

The question, of course, is whether these high-minded statements have any real meaning—whether they result in more responsible practices or are designed mainly to let corporate executives pretend to be moral exemplars.

The answer seems clear. If large corporations truly had a commitment to their employees, they would not engage in so many exploitative practices and fight so hard against unionization. If they truly cared about the environment, they would take more aggressive steps to reduce pollution and address the climate crisis. If they truly cared about ethical supply chains, they would stop sourcing from low-road producers.

Not only are most large corporations far from ethical leaders—in many cases they cannot bring themselves to adhere to their most basic responsibility: obeying the law and complying with regulations.

For the past few years, I’ve spent most of my time documenting corporate lawlessness by building the Violation Tracker database, which now contains more than 360,000 examples of misconduct that have resulted in $470 billion in penalties since 2000.

I ran the names of the 181 companies whose CEOs signed the Roundtable statement through Violation Tracker and, not surprisingly, the results were eye-popping. The signatories and their subsidiaries together account for more than $197 billion in cumulative penalties, or more than 40 percent of the total penalties from tens of thousands of companies.

Twenty-one of the signatories have penalty totals of $1 billion or more, and three with $25 billion or more. At the top of the list is Bank of America, with more than $58 billion in penalties from 128 cases largely involving mortgage abuses and toxic securities. JPMorgan Chase comes in at $30 billion from similar cases. As a consequence of its role in the Deepwater Horizon oil spill and other disasters, BP ranks third with $27 billion in penalties.

The list continues with other big banks (Citigroup, Goldman Sachs, etc.), big utilities (American Electric Power, Duke Energy, etc.), big pharmaceutical manufacturers (Pfizer, Abbott Laboratories, etc.), other big oil companies (Marathon Petroleum, Exxon Mobil, etc.), and others such as Boeing and Walmart.

It is significant that two of the worst corporate miscreants of recent years, Wells Fargo and Volkswagen, are missing from the list of signatories. Perhaps they or the Roundtable realized that their inclusion would have detracted from the message.

Yet the track records of many of the other signatories are not much better. Large corporations that repeatedly break the rules concerning consumer protection, environmental protection, workplace protection, investor protection and every other kind of protection cannot profess that they are committed to serving the well-being of all their stakeholders. Until they change their behavior, their purported principles mean little.

The Continuing Battle Over Workplace Rights

The claim that everyone is entitled to his or her day in court is supposed to be one of the bedrock principles of the U.S. legal system. This notion, as it applies to workplace abuses, took a big hit in the Supreme Court last year, and now the National Labor Relations Board is making matters worse.

In its controversial Epic Systems ruling in May 2018, the high court held that employers can compel their workers to sign agreements waiving their right to sue over issues such as wage theft and discrimination and limiting their redress to arbitration actions. Because these actions are individual rather than collective and are not part of the public record, arbitration makes it much easier for corporations to avoid paying out substantial damages for their misconduct.

The pro-business majority on the NLRB just pushed through a decision that gives employers an additional opportunity to implement a mandatory arbitration system. The board ruled that companies may impose such a system after a Fair Labor Standards Act collective action lawsuit has already been filed, in order to prevent additional employees from signing on to the suit.

The board also affirmed the right of an employer to discharge a worker who refuses to sign a mandatory arbitration agreement.

This patently unfair decision is another indication of the lengths that the corporations and their advocates will go to circumscribe the rights of workers. We should expect to see more of these moves, because the Epic Systems ruling has not yet put a major dent in class action lawsuits.

There has not been a significant decline in the number of cases filed, and there continues to be a steady stream of settlement announcements, especially for cases filed in California, which gives workers additional legal tools to deal with wage theft in particular.

Here are some recent examples of these settlements:

Wells Fargo agreed to pay $35 million to a group of 38,000 bank employees who alleged they were improperly denied overtime pay.

Kraft Heinz agreed to pay $3 million to settle a suit brought on behalf of 4,000 workers alleging that the company violated California labor law by failing to pay overtime.

The operator of hundreds of Panera Bread restaurants agreed to pay $4.6 million to settle allegations that it improperly classified assistant managers as executives to deny them overtime pay.

A group of drivers and their assistants who delivered Best Buy merchandise signed a $3.25 million deal to settle a lawsuit alleging they were misclassified as independent contractors and consequently shortchanged on pay.

A Massachusetts court gave preliminary approval to a $3.9 million settlement of a class action brought by former commission-only salespeople at the mattress retailer Sleepy’s who argued they should receive overtime pay.

If corporate interests get their way, these settlements will disappear, and workers who are cheated on the job will have to settle for the crumbs they may get through individual arbitration filings.

Targeting Migrants in the Workplace

Perhaps to avoid giving the impression that the Trump Administration was getting soft on immigrants by having the president go to El Paso to console the victims of a mass shooting aimed at Latinos, Immigrations and Customs Enforcement chose the same day to carry out the largest workplace raid in more than a decade.

The more than 600 people taken into custody at several sites in Mississippi were not apprehended while engaged in criminal activity, but rather in the course of supporting their families by performing some of the most unpleasant and dangerous work in the U.S. economy: poultry processing.

There were no arrests of managers at the companies involved – which included Koch Foods and Peco Foods, whose spokespeople insisted they carefully screened new hires using the E-Verify system. This came as no surprise, as employers are rarely prosecuted for immigration offenses, whether or not they use E-Verify, or if they are lax in applying the system.

Among the more than 300,000 entries in Violation Tracker there are fewer than 50 cases of immigration-related employer penalties, and only 18 with fines of $1 million or more. Countless other companies have gotten away with employing undocumented workers, among them the Trump Organization.

They also often get away with other workplace violations, though sometimes they are caught in the job safety or wage & hour enforcement net. Koch Foods (not part of Koch Industries), for instance, has been penalized more than $4 million for its Mississippi operation, including three OSHA violations, one wage & hour violation, two environmental violations and a $3.75 million settlement with the EEOC concerning sexual harassment and national origin and race discrimination.

Peco Foods has had five violations at its Mississippi plants, including two from OSHA and three from the EPA.

Mike Elk, writing in Payday Report, notes that some advocates have speculated that workers are targeted for raids after their facilities get cited for workplace violations. He cites several examples in which that happened.

Since companies face little risk of being prosecuted for immigration offenses, it is possible that they may be the ones tipping off ICE, seeing the raids as a way of discouraging whistleblowing by workers about abusive conditions. While the raids cause temporary disruption to their production, these employers hope to discourage replacement workers from being outspoken on the job.

Trump and other immigration hardliners often claim that their aim is to help native-born workers by eliminating the supposed job competition created by migrants. If that were the case, then they would crack down on employers who hire the undocumented.

Instead, they enable those employers to maintain a business model based on worker intimidation.

Corporate Accountability from Within

It appears that no one working for the public relations giant Edelman balked in 2006 when the firm went all-out to help then-besieged Wal-Mart by setting up a war room to plan attacks against the retailer’s critics and creating bogus front groups to create the illusion that the company had widespread public support. Nor apparently did Edelman staffers have any problem over the years when the firm took on clients such as tobacco companies, military contractors, the petroleum industry and the American Legislative Exchange Council.

Times are changing in the corporate p.r. business. The New York Times just reported that a staff revolt forced Edelman to abandon a plan to work for the private prison company GEO Group and improve its image in the face of criticism of its role in operating immigrant detention centers for the Trump Administration.

The Edelman situation is not unique. The Times noted that the marketing and p.r. firm Ogilvy has been facing staff unrest over its work for Customs and Border Protection, and employees at Deloitte and McKinsey tried to get their firms to end contracts with Immigration and Customs Enforcement. Pressure on management over work for these agencies has also been reported at tech companies such as Microsoft and Amazon as well as the online furniture retailer Wayfair.

Employees at large corporations are making their feelings known about other issues as well. Staffers at Amazon have pressed the company to do more to address the climate crisis. Perhaps the most dramatic move came last November when thousands of Google employees around the world walked off the job to protest the company’s handling of sexual harassment complaints.

These actions have come at a time when the conventional wisdom is that collective action by workers is a largely thing of the past. It is true that unions continue to struggle, as shown, for example, by the recent defeat of another organizing drive at Volkswagen’s operations in Tennessee in the face of intense opposition from management as well as public officials.

Yet what the actions at Edelman and the tech companies show is that workers – including some who may be very well paid – are finding different ways to express their dissatisfaction.

What’s particularly powerful is when employees launch campaigns that combine self-interest with altruistic goals. That’s what happened at Google, where the aim was both to change practices within the company and to support the wider MeToo Movement.

It’s also what gave such potency to the wave of teachers’ strikes that began in early 2018. Those walkouts were prompted both by the urgent need to raise salaries and the need to improve school funding to address overcrowding and other problems affecting students.

The willingness of employees to take on issues such as migrant abuse can also serve to expose the shallowness of much of what goes under the banner of corporate social responsibility. Edelman, for instance, claims that it is committed to being a “force for good.”

That somehow got forgotten when its managers initially agreed to work for GEO Group. It took a bold stance by the staff to overcome the hypocrisy.

Facebook Joins the Multi-Billion-Dollar Penalty Club

It is a sign of how jaded we have become to corporate misconduct that the $5 billion fine imposed on Facebook by the Federal Trade Commission for privacy violations is being shrugged off by the company, by the market and by the public. Many are describing it as a slap on the wrist.

It’s true that a ten-figure penalty is no longer such a rarity. According to Violation Tracker, 35 parent companies have had to pay that amount in at least one case in the United States. Eleven corporations have been hit with billion-dollar-plus penalties more than once. Of these, nine are big banks: Bank of America, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Royal Bank of Scotland and Wells Fargo. The other two are BP and Volkswagen.

Bank of America, whose penalty total is far greater than that of any other corporation, has racked up seven ten-figure cases, including three in excess of $10 billion.

BofA’s rap sheet is perhaps the most persuasive evidence that escalating penalties are not having the desired effect of deterring corporate wrongdoing. Even at the higher levels, the fines are seen by large companies as a tolerable cost to pay for continuing to do business more or less as before.

The Justice Department and the regulatory agencies seem to be aware of this and are at least making noises about taking other steps to deter and punish miscreants.

In the case of Facebook that includes provisions in the FTC settlement that will put more responsibility on the company’s board to make sure that privacy protections are enforced. It also enhances external oversight by an independent third-party monitor.

All of this might be more impressive if Facebook had not already signed a previous settlement with the FTC in 2012 that was supposed to establish strong privacy protections—provisions that the company has clearly evaded.

Also contained in the Facebook settlement is a provision that will require Facebook CEO Mark Zuckerberg to personally certify that the company is adhering to privacy protections. This would only have an impact if it is rigorously enforced, with non-compliance putting him behind bars rather than just triggering another big payout.

There is also renewed discussion of stepped up antitrust enforcement, especially against the big tech companies. This would be more effective if federal authorities were willing to try breaking up the likes of Facebook, Alphabet/Google and Amazon rather than seeking limited restrictions on their market power. That approach has largely been shunned for the past two decades, ever since the effort to split up Microsoft collapsed and the DOJ had to settle for more modest remedies.

Prosecutors and policymakers continue to struggle with the issue of how to deal with large companies. Often it seems they are mainly concerned with little more than giving the appearance of getting tough. Only when faced with sustained public pressure will they come up with effective ways to rein in rogue corporations.

The Tainted Corporations Dominating the Opioid Industry

The release of a previously confidential database is providing insights into the opioid industry analogous to what would be contained in the secret accounts of all the Mexican drug cartels. The database, known as the Automation of Reports and Consolidated Order System, or ARCOS, is compiled by the U.S. Drug Enforcement Administration. It was made public by the federal judge in Cleveland overseeing a massive lawsuit brought by nearly 2,000 localities against opioid manufacturers and distributors.

A detailed analysis of the database by the Washington Post shows that the industry has been heavily concentrated in the hands of fewer than a dozen large corporations. These companies are among the defendants in the Cleveland case and are increasingly being targeted for their role in generating an epidemic that has caused hundreds of thousands of deaths.

The claims by the corporations that they are not to blame for the crisis is made harder to swallow by the fact that they each have a history of involvement in other types of corporate misconduct. That history, taken from their entries in Violation Tracker, is summarized below.

The Post analysis of ARCOS shows that just six companies distributed three-quarters of the 76 billion oxycodone and hydrocodone pills that saturated the country in the period from 2006 to 2012.

McKesson Corporation, which accounted for 18.4 percent of the pills, has accumulated more than $400 million in total penalties, more than half of which comes from False Claims Act cases. For example, in 2012 it paid $190 million to settle federal allegations that it reported inflated drug pricing information for a large number of prescription drugs, causing Medicaid to overpay for those medications. The company paid another $151 million to settle related allegations brought by 28 state attorneys general in a case not yet in Violation Tracker (but will be added in an expansion later this year).

Walgreens (16.5 percent) is now part of Walgreens Boots Alliance, which has total penalties of $589 million. Nearly half of that comes from a $269 million settlement of False Claims Act allegations of improper billing for insulin pens. In 2013 Walgreens paid $80 million in a Controlled Substances Act case.

Cardinal Health (14 percent) has more than $195 million in penalties, the largest portion of which includes four cases involving violations of the Controlled Substances Act. Among its other controversies: a $35 million settlement with the SEC of allegations it engaged in fraudulent accounting and a $26.8 million settlement with the Federal Trade Commission concerning anti-competitive practices.

AmerisourceBergen (11.7 percent) has accumulated $899 million in penalties, including a $625 million False Claims Act settlement and a $260 million criminal penalty for distributing misbranded oncology drugs.

CVS (7.7 percent) has $850 million in penalties, more than half of which comes from 15 False Claims Act cases. Another $183 million resulted from Controlled Substances Act matters.

Rounding out the list of major distributors is Walmart (6.9 percent), which has accumulated $1.6 billion in penalties, 90 percent of which resulted from wage and hour cases.

According to the Post analysis, three companies accounted for 88 percent of opioid production during the 2006-2012 period.

SpecGx, a subsidiary of Mallinckrodt, accounted for the largest portion, 37.7 percent. Mallinckrodt has $139 million in penalties, including a $100 million antitrust settlement and a $35 million Controlled Substances Act settlement.

Actavis Pharma (34.6 percent) is now owned by Teva Pharmaceuticals, which has more than $2 billion in penalties, most of which comes from cases involving allegations that another subsidiary, Cephalon, engaged in anti-competitive practices and marketed drugs for purposes not approved by the Food and Drug Administration.

The last big manufacturer is Par Pharmaceutical (15.7 percent), a subsidiary of Endo International, which has total penalties of $287 million, including a $192 million settlement for marketing of drugs for unapproved purposes.

Purdue Pharma, which is often the leading target of criticism for the opioid crisis, showed up in the ARCOS database as producing only 3 percent of output.

Given the involvement of these companies in all kinds of corporate misconduct, it is highly unlikely that they were blameless in bringing about the opioid epidemic. Chances are that the lawsuit in Cleveland will result in substantial increases in their penalty totals.

One Less Wheeler Dealer

It’s unfortunate that 18,000 people will lose their jobs in the process, but it is good news that Deutsche Bank is leaving the investment banking business. The world is better off with one less wheeling and dealing financial player that has repeatedly flouted all kinds of laws and regulations.

That tarnished record dates back to the late 1990s, when Deutsche Bank acquired New York-based Bankers Trust, which was testing the limits of what a commercial bank could do while getting embroiled in a series of scandals.

Just a few months after the acquisition was announced, Bankers Trust pleaded guilty to criminal charges that its employees had diverted $19 million in unclaimed checks and other credits owed to customers over to the bank’s own books to enhance its financial results. The bank paid a $60 million fine to the federal government and another $3.5 million to New York State.

Deutsche Bank was also having its own legal problems during this period. In 1998 its offices were raided by German criminal investigators looking for evidence that the bank helped wealthy customers engage in tax evasion. In 2004 investors who purchased what turned out to be abusive tax shelters from DB sued the company in U.S. federal court, alleging that they had been misled (the dispute was later settled for an undisclosed amount). That litigation as well as a U.S. Senate investigation brought to light extensive documentation of DB’s role in tax avoidance.

In the 2000s, DB was penalized repeatedly by financial regulators, including a 2004 settlement with the Securities and Exchange Commission in which it had to pay $87.5 million to settle charges of conflicts of interest between its investment banking and its research operations, and a $208 million settlement with federal and state agencies in 2006 to settle charges of market timing violations.

In 2009 the SEC announced that DB would provide $1.3 billion in liquidity to investors that the agency had alleged were misled by the bank about the risks associated with auction rate securities.

In 2010 the U.S. Attorney for the Southern District of New York announced that DB would pay $553 million and admit to criminal wrongdoing to resolve charges that it participated in transactions that promoted fraudulent tax shelters and generated billions of dollars in U.S. tax losses.

In 2011, the Federal Housing Finance Agency sued DB and other firms for abuses in the sale of mortgage-backed securities to Fannie Mae and Freddie Mac (the case was settled for $1.9 billion in late 2013).

In 2012 the Southern District of New York announced that DB would pay $202 million to settle charges that its MortgageIT unit had repeatedly made false certifications to the Federal Housing Administration about the quality of mortgages to qualify them for FHA insurance coverage.

In 2013 DB agreed to pay a $1.5 million fine to the Federal Energy Regulatory Commission to settle charges that it had manipulated energy markets in California in 2010.

In 2013 Massachusetts fined Deutsche Bank $17.5 million for failing to inform investors of conflicts of interest during the sale of collateralized debt obligations. That same year, DB was fined $983 million by the European Commission for manipulation of the LIBOR interest rate index. (Later, in 2015, it had to agree to pay $2.5 billion to settle LIBOR allegations brought by U.S. and UK regulators.)

In 2015 the SEC announced that DB would pay $55 million to settle allegations that it overstated the value of its derivatives portfolio during the height of the financial meltdown. Later that year, DB agreed to pay $200 million to New York State regulators and $58 million to the Federal Reserve to settle allegations that it violated U.S. economic sanctions against countries such as Iran.

In January 2017 the bank reached a $7.2 billion settlement of a Justice Department case involving the sale of toxic mortgage securities during the financial crisis. That same month, it was fined $425 million by New York State regulators to settle allegations that it helped Russian investors launder as much as $10 billion through its branches in Moscow, New York and London.

In March 2017 Deutsche Bank subsidiary DB Group Services (UK) Limited was ordered by the U.S. Justice Department to pay a $150 million criminal fine in connection with LIBOR manipulation. The following month, the Federal Reserve fined DB $136 million for interest rate manipulation and $19 million for failing to maintain an adequate Volcker rule compliance program. Shortly thereafter, the Fed imposed another fine, $41 million, for anti-money-laundering deficiencies. In October 2017 DB paid $220 million to settle multistate litigation relating to LIBOR.

In 2018 DB paid a total of $100 million to the Commodity Futures Trading Commission–$70 million for interest-rate manipulation and $30 million for manipulation of metals futures contracts.

As a result of all these and other cases, Deutsche Bank ranks seventh among parent companies in Violation Tracker, with more than $12 billion in total penalties.

Not all these cases arose out of DB’s investment banking business. Its commercial banking operation, which will continue, was responsible for keeping the Trump Organization afloat when other banks shunned the shaky company. And it has just come to light that DB provided loans to the notorious Jeffrey Epstein.

Deutsche Bank’s history of controversies may not be over.

De-Enforcement

For the past two years, the Trump Administration has sought to give the impression it is dismantling large parts of the federal regulatory system. The effort is not only wrong-headed – it has largely been unsuccessful. Many of the moves to eliminate rules have been thwarted by court challenges.

Yet the administration has found another way to advance its goal of allowing rogue corporations to operate with much lower levels of oversight: it is reducing the ranks of federal employees whose job it is to enforce the regulations that remain on the books.

A recent overview by the Wall Street Journal found that staffing at the Environmental Protection Agency is down by about half since its height during President Obama’s second term. The Occupational Safety and Health Administration was said to have the fewest workplace inspectors in decades.

Fewer inspectors means fewer inspections and lower levels of penalties imposed for infractions. Last year, Public Citizen and the Corporate Research Project, using data from Violation Tracker, published a report showing how penalty levels were sinking at virtually all the key agencies. The evidence suggests that the trend is continuing.

Some of the staffing decline is due to attrition. Many regulatory agency employees have retired or resigned because they can no longer bear to work to see their mission undermined by the political appointees Trump has installed. More than 700 left the EPA in first 12 months after the administration took office.

Trumpworld is no longer depending entirely on attrition to hollow out the EPA. Now the administration is engaged in a direct attack on the remaining employees at the agency. EPA management has just informed the American Federation of Government Employees, the largest union at the EPA, that it will unilaterally impose changes in working conditions on 9,000 staffers.

The changes, which AFGE is challenging with an unfair labor practice filing, would, among other things, bar employees from telecommuting and would severely limit the amount of time rank-and-file union representatives can spend on grievances and other workplace matters. AFGE reps would also be evicted from the office space at the agency currently being used for union activity. Grievance and arbitration rights themselves would also be put in jeopardy.

The moves by EPA management appear to be an indirect way of implementing harsh policies that Trump tried to implement through executive order last year, but which were blocked by a federal judge. “In the Trump world, there is no bargaining, only ultimatums,” stated Tim Whitehouse, executive director of Public Employees for Environmental Responsibility and a former EPA enforcement attorney. “Under these rules, important safeguards against political purges within the civil service would be removed.”

Trump has received a great deal of deserved criticism for his attacks on federal prosecutors and Congressional oversight, given the corrosive effect on the rule of law. The administration’s actions against staffers at agencies such as the EPA are just as dangerous for our system of regulatory enforcement.