Regulation

The 2020 Corporate Rap Sheet

For all of his populist bluster, Donald Trump has done little during his four years in office to stem the power of big business. He criticizes corporations only when he feels personally slighted or when it fits into one of his many outlandish conspiracy theories.

Fortunately, career officials at regulatory agencies and career prosecutors at the Justice Department, as well as those at the state level, have continued doing their jobs. The following is a selection of significant cases resolved during 2020.

Opioid market abuses: The Justice Department announced an $8 billion global resolution of its criminal and civil investigations into abuses by Purdue Pharma LP. The company agreed to plead guilty to three felony counts and pay criminal fines and forfeitures of $5.5 billion and $2.8 billion in a civil settlement. Given that the company is going through bankruptcy, it is unclear how much of this will actually be paid.

Bogus bank accounts: As part of the ongoing prosecution of Wells Fargo for pressuring employees to meet unrealistic sales goal by creating bogus accounts without customer permission, the Justice Department announced that the bank would pay $3 billion to resolve criminal and civil charges. Wells was allowed to enter into a deferred prosecution agreement to avoid a guilty plea.

Foreign bribery: Goldman Sachs and its Malaysian subsidiary admitted to conspiring to violate the Foreign Corrupt Practices Act in connection with a scheme to pay over $1 billion in bribes to Malaysian and Abu Dhabi officials to obtain lucrative business for Goldman Sachs, including its role in underwriting approximately $6.5 billion in three bond deals for 1Malaysia Development Bhd. Goldman Sachs agreed to pay more than $2.9 billion and disgorge $606 million as part of a coordinated resolution with criminal and civil authorities in the United States, the United Kingdom, Singapore, and elsewhere.

Emissions cheating: The Department of Justice, the Environmental Protection Agency, and the California Air Resources Board announced a $1.5 billion settlement with German automaker Daimler AG and its American subsidiary Mercedes-Benz USA, LLC resolving alleged violations of the Clean Air Act and California law associated with emissions cheating.

False claims and kickbacks: Novartis agreed to pay over $642 million in separate settlements resolving claims that it violated the False Claims Act. The first settlement pertained to the company’s alleged illegal use of three foundations as conduits to pay the copayments of Medicare patients. The second settlement resolved claims arising from the company’s alleged payments of kickbacks to doctors.

Tax evasion: Bank Hapoalim of Israel agreed to pay a total of more than $600 million in penalties to resolve criminal allegations by the Justice Department that it conspired with U.S. taxpayers to hide assets and Income in offshore accounts. The parent company entered into a deferred prosecution agreement while its Swiss subsidiary pled guilty.

Illegal robocalls: Dish Network agreed to pay $210 million to resolve a long-running federal-state lawsuit alleging that the company engaged in illegal telemarketing through unwanted robocalls to thousands of people on the Do Not Call registry.

Spoofing: The Commodity Futures Trading Commission and the Justice Department announced that JPMorgan Chase would pay $920 million to resolve civil and criminal allegations involving deceptive conduct that spanned at least eight years and involved hundreds of thousands of spoof orders in precious metals and U.S. Treasury futures contracts on the Commodity Exchange, Inc., the New York Mercantile Exchange, and the Chicago Board of Trade.

Predatory lending: Banco Santander’s U.S. arm agreed to pay $550 million to resolve multistate litigation alleging that the bank, through its use of proprietary credit scoring models to forecast default risk, knew that certain consumer segments were likely to default, yet issued high-interest automobile loans to them anyway.

Corruption: A criminal investigation of Commonwealth Edison was resolved with a deferred prosecution agreement under which ComEd agreed to pay $200 million and admit it arranged jobs, vendor subcontracts, and monetary payments associated with those jobs and subcontracts, for various associates of a high-level elected official for the state of Illinois, to influence and reward the official’s efforts to assist ComEd with respect to legislation.

Defrauding investors: SCANA Corp. and its subsidiary SCE&G agreed to settle a Securities and Exchange Commission lawsuit charging them with defrauding investors by making false and misleading statements about a nuclear plant expansion that was ultimately abandoned. The company agreed to pay a $25 million penalty and $112.5 million in disgorgement.

Mortgage abuses: Nationstar Mortgage, which does business as Mr. Cooper, agreed to pay $86.8 million to resolve federal and multistate allegations that the mortgage servicer engaged in unlawful practices in the wake of the 2008 financial crisis. The settlement addressed alleged misconduct regarding servicing transfers, property preservation, loan modifications, and other issues, which in some cases led to improper foreclosure or borrowers being locked out of their homes.

Labor relations violations: CNN agreed to pay $76 million in backpay, the largest monetary remedy in the history of the National Labor Relations Board, to resolve a case that originated in 2003 when CNN terminated a contract with Team Video Services and hired new employees to perform the same work without recognizing or bargaining with the two unions that had represented the TVS employees.

Additional details on these cases can be found in Violation Tracker. Some will appear next week in an update to the database that will increase the number of its cases to 444,000 and the penalty total to $650 billion.

Downplaying Corporate Misconduct

Despite all the effort it has put into eliminating business regulations, the Trump Administration insists that it diligently enforces those rules that are still in effect. Moreover, Trump likes to depict himself as some sort of crusader against corporate misconduct.

A new indication of the absurdity of these claims comes from the U.S. Labor Department, which recently decided it would no longer issue press releases when citing companies for violations of rules governing workplace safety, employment discrimination and labor standards. According to an internal memo obtained by the New York Times, the excuse for the change was that such releases tend to linger prominently in search results and would be misleading if an enforcement action was ultimately found to have been unjustified.

Rarely does an alleged violation turn out to have no basis, and in those very few instances the problem could be resolved by the issuance of a new press release that would presumably circulate as easily as the original one. The real motivation for the change is to reduce the ability of agencies to pressure corporate transgressors and could be a stepping-stone toward the elimination of all announcements of violations.

Some parts of the Trump Administration already seem to have moved in that direction. In the course of collecting data for Violation Tracker, I check the websites of more than 50 federal regulatory agencies every three months to find new cases to add to the database. By the way, only finalized cases are included.

Agencies report on different schedules. Some issue a press release on each case when it is resolved or add each penalty to an ongoing database. Others disclose the data periodically, whether monthly, quarterly or annually.

What I have found is that some agencies seemed to have given up on new reporting even while leaving their historical data in place. Here are some examples:

The Bureau of Safety and Environmental Enforcement, which regulates offshore oil drilling, has no data on its civil penalties page more recent than fiscal year 2018.

The Federal Maritime Commission’s Bureau of Enforcement has not updated its penalty announcements since May 2019.

The most recent item on the Consumer Product Safety Commission’s list of press releases relating to an enforcement penalty is dated November 26, 2018.

It is difficult to determine whether these agencies are not announcing enforcement actions or have stopped bringing them. Either would be troubling.

Publicizing violations and penalties is just as important as the enforcement actions themselves. For many companies, the fines they are required to pay are trivial. The disclosure of their conduct means much more in terms of the impact on the firm’s reputation among customers and investors. Those revelations, called “regulation by shaming” in the academic literature, can have a bigger deterrent effect.

Violation Tracker is meant to enhance the deterrence by collecting a wide variety of disclosures about corporate misconduct and showing the degree of recidivism, especially among large companies. Keeping the database current is a lot easier when agencies are not hiding their data.

Corporate Culprits Receiving COVID Bailouts

In implementing the CARES Act passed by Congress to rescue the economy from the effects of the pandemic, the Trump Administration has directed tens of billions of dollars in aid to companies with a track record of misconduct. This transfer of public wealth to private bad actors will likely turn out to be more expensive than the TARP bailout of the banks a decade ago, given that much of the new aid will not be repaid.

My colleagues and I at Good Jobs First have found that more than 43,000 regulatory violators and other business miscreants have so far received $57 billion in grants and $91 billion in loans, including many that are forgivable. Over the past decade, the penalties paid by these companies for their misdeeds amounted to more than $13 billion. Our findings are summarized in a new report titled The Corporate Culprits Receiving COVID Bailouts.

We derived these numbers through a careful comparison of the CARES Act data we have compiled for our Covid Stimulus Watch website and the entries covering the past decade in Violation Tracker.

More than 87 percent of the CARES Act recipients with a record of misconduct are small businesses, while the other 13 percent are units and subsidiaries of larger companies. The latter received $55 billion in grants and $53 billion in loans, while the smaller companies received $2 billion in grants and $38 billion in loans. The large companies account for 90 percent of the penalty dollars.

The largest violation category among all 43,000 companies is government contracting at $5.6 billion, or 42 percent of the total. Employment-related penalties and consumer protection penalties each add up to about $3 billion (23 percent), while environmental and safety penalties total $1.6 billion (12 percent).

Hospitals (both for-profit and non-profit) and other providers that received funding from healthcare-related CARES Act programs account for $9 billion of the penalties, or 68 percent of the total. More than half of these penalties derive from Medicare and Medicaid billing fraud.

Recipients of small-business loans account for $3 billion of the penalties (23 percent), with the largest portions coming from wage theft and workplace safety and health violations.

There are two other groups of CARES Act recipients with a significant history of misconduct: colleges and universities getting aid through the Higher Education Emergency Relief Fund and airlines receiving massive levels of assistance through the Payroll Support Program. They paid $900 million and $600 million in penalties, respectively.

Seventy CARES Act recipients had been involved in cases that included criminal charges. Of these, 33 of the defendants were large companies, which paid total penalties of $3 billion. The 37 smaller defendants paid $47 million.

While the bulk of CARES Act spending comes in the form of grants and loans, the Federal Reserve is also seeking to prop up the commercial credit market by purchasing corporate bonds, especially those issued by Fortune 500 and Global 500 corporations. The corporations whose bonds have been purchased by the Fed account for more than $100 billion in penalties over the past decade. Because the purchases, which averaged about $3 million per company, are small in comparison to the size of these corporations, we decided not to include the associated penalties in the main analysis of the report.

The revelation that tens of thousands of CARES Act recipients have records of misconduct—including some cases of a criminal nature—raises serious questions about how the aid was distributed. It appears that little screening was done by federal agencies before awarding grants and loans, partly because there were no strict eligibility requirements written into the CARES Act. In some programs the money was apportioned by formula rather than choosing some recipients over others.

In the Paycheck Protection Program there was an application process, but it was handled by banks – which received commissions for their efforts – rather than the Small Business Administration. The application form required business owners to state whether they personally had been convicted or pled guilty to felonies such as fraud and bribery, while for the companies themselves the only issue seemed to be whether they had been debarred by a federal agency.

While little can be done about aid awards that were technically legal, there are steps the federal government could take with regard with two categories of recipients. The first consists of those companies and non-profits which were accused of defrauding the federal government and which paid civil penalties (usually through a settlement) for False Claims Act violations. The other category consists of those involved in cases that were serious enough to be brought with criminal charges.

Given that companies involved in FCA cases are usually allowed to continue doing business with the federal government after paying their penalty, it would be difficult to debar them from future covid stimulus programs. These companies should, however, be subject to additional scrutiny to ensure they do not resume their fraudulent behavior while receiving grants and loans.

The most compelling case for excluding a group of companies from participation in future aid programs concerns those with a history of criminal misconduct. The PPP provision dealing with corrupt business owners should be applied to businesses themselves, especially when the firms involved are larger entities. Doing so would protect taxpayer funds and serve as a deterrent against future corporate criminality.

Small Companies, Big Misdeeds

More than 1 million companies have received financial assistance from the CARES Act. My colleagues and I at Good Jobs First have been seeking to determine how many of those recipients have a track record of misconduct, and we will soon be releasing a report summarizing what we have found.

One conclusion I can share now is that the misbehavior can be found among small companies as well as large ones. While many of the smaller firms and non-profits paid penalties for commonplace offenses, some were involved in more serious cases. Here are some examples:

Coast Produce Company has received a Paycheck Protection Program loan worth between $2 and $5 million (the data was disclosed in ranges). In 2015 it paid $4 million to resolve civil allegations that it fraudulently overcharged the federal government for fresh fruits and vegetables it supplied to military dining facilities and Navy ships in Southern California. As part of a second agreement with criminal prosecutors, it agreed to implement various measures to ensure the company complies with its legal obligations.

The Academy of Art University has received a grant of $1.9 million from the Higher Education Emergency Relief Fund. In 2016 it paid the San Francisco City Attorney $60 million ($20 million in penalties and fees, and units of affordable housing valued at $40 million) in settlement of allegations it had ignored city land use rules, with multiple violations of zoning, signage, environmental, historical preservation and building code requirements.

American Refining Group in Pennsylvania has received a PPP loan worth between $5 and $10 million. In 2019 it had to pay $4.85 million ($350,000 in penalties and $4.5 million in equipment improvements) to resolve allegations by the Environmental Protection Agency that it was violating the Clean Air Act.

Meadows Regional Medical Center in Georgia has received a $9.3 million grant from the Provider Relief Fund. In 2017 it paid more than $12 million to resolve federal and state allegations of violating anti-kickback laws through its financial arrangements with physicians.

The Gagosian Gallery in New York has received a PPP loan worth between $2 and $5 million. In 2016 it paid $4.28 million to the New York Attorney General to resolve allegations that one of its affiliates engaged in sales tax evasion for a decade.

Williamson and McKevie LLC has received an Economic Injury Disaster Loan of $150,000. In a 2018 settlement with the Georgia Attorney General it agreed to give up accounts worth $8.8 million and pay a $20,000 civil penalty to resolve allegations it committed multiple violations of the federal Fair Debt Collection Practices Act and the Georgia Fair Business Practices Act when it repeatedly harassed and deceived consumers.

Adams Thermal Systems has received a PPP loan worth between $2 and $5 million. In 2013 it entered into a deferred prosecution agreement with the U.S. Attorney’s Office and the Occupational Safety and Health Administration to pay more than $1.33 million in criminal penalties and OSHA fines levied as a result of the 2011 death of a worker at the company’s plant in Canton, South Dakota.

These are just a few of the thousands of examples of companies that have gone from being defendants to recipients of federal largesse.

The Other Regulators

When it comes to business regulation, we tend to focus on federal agencies, which for the financial sector means the SEC, the CFPB, the Federal Reserve and the like. Yet there is another world of financial regulation at the state level, which at a time of weakening enforcement is more important than ever.

My colleagues and I at the Corporate Research Project have just completed a deep dive in this world for a major expansion of Violation Tracker. We collected enforcement data dating back to the beginning of 2000 for each state’s regulatory agencies dealing with banking, consumer finance, insurance and securities. In all, we created 15,000 entries with total penalties of more than $17 billion.

The number of cases and penalty amounts vary greatly from state to state. Among the more than 150 agencies we looked at, some disclosed hundreds of successful enforcement actions while others reported a few dozen. Some states are active in one of the areas we examined and weak in others.

The state that has by far collected the most in overall penalties is New York, whose total is more than $11 billion. Its Department of Financial Services has gone after the world’s biggest financial institutions and has won major settlements such as the $2.2 billion paid by the French bank BNP Paribas for violating international economic sanctions and the $715 million paid by the Swiss bank Credit Suisse for facilitating tax evasion.

California is second in penalties at just over $1 billion but far ahead in the number of cases. Its financial regulatory agencies have carried out more than 2,000 successful actions. Their biggest settlement was the $225 million paid in 2017 by Ocwen Loan Servicing for mortgage abuses.

Three other states have collected more than $100 million in penalties: Arizona ($665 million in 488 cases), Texas ($632 million in 1,097 cases) and New Jersey ($339 million in 398 cases).

If we focus on the area of insurance, in which the states have pretty much exclusive jurisdiction, the largest number of penalties of $5,000 or more were found in California (1,475), Texas (950) and Virginia (633). Yet in terms of total penalty dollars, New York was first with $808 million, followed by Texas ($617 million) and California ($541 million).

We also identified more than 100 cases in which regulators from different states brought cases jointly. These actions are similar to the multi-state attorneys general cases we analyzed in our Bipartisan Crime Fighting by the States report published in September 2019.

The cases brought by groups of state insurance and securities regulators have yielded about $2 billion in penalties since 2000. The companies that have paid the most in penalties in these cases are: Citigroup ($251 million), American International Group ($204 million), Bank of America ($201 million) and the Swiss bank UBS ($179 million).

Looking at both single-state and multi-state actions in banking, insurance and securities combined, the companies that have paid the most in total penalties turn out to be the big foreign banks, which account for every spot in the top ten. That New York sanctions case puts BNP Paribas on top with more than $2 billion, followed by Deutsche Bank and Credit Suisse.

The U.S. companies with the largest overall penalty totals are State Farm Insurance ($368 million), UnitedHealth Group ($354 million), Citigroup ($295 million), American International Group ($275 million) and MetLife ($263 million).

With the addition of the state financial cases, Violation Tracker now contains 437,000 cases with total penalties of $627 billion imposed by more than 50 federal and 200 state and local agencies.

Corporate America Wants Its Own Immunity Passport

It is unclear at the moment whether Mitch McConnell and other Congressional Republicans are backing off their demand that corporations be given protection from covid-19 lawsuits — or if they are maneuvering behind the scenes in favor of the proposal.

What I find amazing is that business lobbyists and their GOP supporters think they can sell the country on the idea, which would be a brazen giveaway to corporate interests.

There are numerous compelling arguments against immunity, but I want to focus on one: the track records of corporations themselves. Proponents of a liability shield imply that large companies normally act in good faith and that any coronavirus-related litigation would be penalizing them for conditions outside their control. These lawsuits, they suggest, would be frivolous or unfair.

This depiction of large companies as innocent victims of unscrupulous trial lawyers is a long-standing fiction that business lobbyists have used in promoting “tort reform,” the polite term for the effort to limit the ability of victims of corporate misconduct to seek redress through the civil justice system. That campaign has not been more successful because most people realize that corporate negligence is a real thing.

In fact, some of the industries that are pushing the hardest for immunity are ones that have terrible records when it comes to regulatory compliance. Take nursing homes, which have already received a form of covid immunity from New York State.

That business includes the likes of Kindred Healthcare, which has had to pay out more than $350 million in fines and settlements. The bulk of that amount has come from cases in which Kindred and its subsidiaries were accused of violating the False Claims Act by submitting inaccurate or improper bills to Medicare and Medicaid. Another $40 million has come from wage and hour fines and settlements.

Kindred has also been fined more than $4 million for deficiencies in its operations. This includes more than $3 million it paid to settle a case brought by the Kentucky Attorney General over issues such as “untreated or delayed treatment of infections leading to sepsis.”

Or consider the meatpacking industry, which has experienced severe outbreaks yet is keeping many facilities open. This sector includes companies such as WH Group, the Chinese firm that has acquired well-known businesses such as Smithfield. WH Group’s operations have paid a total of $137 million in penalties from large environmental settlements as well as dozens of workplace safety violations.

Similar examples can be found throughout the economy. Every large corporation is, to at least some extent, a scofflaw when it comes to employment, environmental and consumer protection issues. There is no reason to think this will change during the pandemic. In fact, companies may respond to a difficult business climate by cutting even more corners.

The two ways such misconduct can be kept in check are regulatory enforcement and litigation. We have an administration that believes regulation is an evil to be eradicated.

This makes the civil justice system all the more important, yet business lobbyists and their Congressional allies are trying to move the country in exactly the opposite direction. They want to liberate big business from any form of accountability, giving it what amounts to an immunity passport. Heaven help us if they succeed.

A Pandemic Is No Time to Dismantle Regulatory Safeguards

As much of the economy melts down amid the coronavirus pandemic, many large corporations are lining up for financial bailouts from the federal government. Assuming the right safeguards are put in place, these payments may be justified. Yet there is a risk that big business may also seek another kind of assistance whose benefit is more dubious: relief from regulations.

Some loosening of restrictions make sense in a crisis, and federal regulators are already taking steps to address immediate needs. The FDA is changing rules so that private labs and state health departments can more readily use covid-19 tests developed outside of the agency. HHS is allowing healthcare providers to bill Medicare for telemedicine sessions.

Those are the no-brainers. But what about the decision by the Federal Motor Carrier Safety Administration to relax restrictions on truck driver hours for those making emergency deliveries? Do we want sleepy drivers on the road, even if they are doing essential work?

And then there are the calls from big banks for lower capital requirements and the easing of periodic stress tests. The point of those requirements is to make sure banks are in a position to weather a downturn. Relaxing the rules is something the big banks were urging well before the pandemic, and their push now may be little more than an effort to exploit the crisis.

We are likely to see more calls for regulatory easing both from corporations and from Trump Administration agencies such as the EPA that have already been trying to undermine existing safeguards.

There is also a debate on whether regulatory rulemaking should continue at a time when many regulators are working from home and many advocates may have a harder time monitoring current proceedings.

Since many of those proceedings involve efforts by industry and the Trump Administration to roll back or eliminate current rules, delays would provide a welcome obstacle to the deregulatory juggernaut. On the other hand, agencies may use the pandemic as an excuse to reduce the opportunities for public interest groups to intervene in the process.

Another gnarly question is how to handle bailouts for corporations that have less than stellar records when it comes to regulatory compliance. We don’t want to ignore the needs of employees of those companies who might otherwise lose their jobs, but it also doesn’t feel right to be handing over large sums to firms that have flouted the law.

If those payments are going to happen, among the strings that need to be attached could be provisions requiring companies to strictly adhere to all applicable laws and regulations. Scofflaws would be compelled to repay the money and face other serious consequences.

Big business should not be allowed to use the covid-19 pandemic as cover for undermining safeguards that protect us from the many other dangers in the world.

Note: Violation Tracker has just been updated. It now contains more than 412,000 entries representing more than $616 billion in penalties. The corporation with the biggest jump in its penalty total is Wells Fargo, due to its recent $3 billion sham-account settlement with the federal government.

Cracking Down on Modern-Day Child Labor Abuses

When the Massachusetts Attorney General announced in January that Chipotle was being fined over $1 million for child labor violations, it was a jarring reminder that a practice usually associated with the sweatshops and coal mines of the early 20^th century is still with us.

The Fair Labor Standards Act of 1938 put restrictions on the employment of minors but did not abolish it entirely. Instead, it established minimum ages for various kinds of work and set restrictions on working hours. States have child labor laws of their own.

Compliance with these rules was far from universal, but it appeared that the violators were mainly small businesses. The U.S. Labor Department’s Wage and Hour Division did its best to investigate these abuses and imposed penalties that typically amounted to around $10,000 and involved a single location, even when it was an outlet or franchise of a much larger corporation.

Massachusetts AG Maura Healey is abandoning that approach and bringing broader actions that highlight the magnitude of the problem. The Chipotle case included $1.37 million in restitution and penalties for an estimated 13,253 child labor violations and other state wage-and-hour infractions at the company’s 50 corporate-owned locations in the state. As part of the settlement, Chipotle also agreed to pay $500,000 to help create a fund to be administered by the AG’s office to educate the public about child labor and to provide training opportunities for young people.

Healey’s investigators had found that Chipotle regularly employed minors without work permits, required 16- and 17-year-old employees to work later than the law allows, and in some instances had minors working beyond the nine-hour daily limit and the 48-hour weekly maximum.

Chipotle is not the only large company targeted by Healey. In February her office announced a $400,000 settlement with Wendy’s International covering an estimated 2,100 violations at its 46 corporate-owned restaurants in the state. The infractions were similar, such as having 16- and 17-year-olds working later than allowed and beyond the nine-hour daily limit.

Last year, the Massachusetts AG reached a $409,000 settlement with Qdoba Restaurant Corporation for the same kind of violations at its 22 corporate-owned locations.

The consequences of overworking minors are the same as they were was a century ago. Long hours on the job interfere with school work and can negatively impact the health of young people. Fast food outlets may not pose quite the same physical hazards as the factories and mines where children were once employed, but they are far from risk-free.

For instance, there have been many reports of sexual harassment of young workers at restaurant chains such as McDonald’s, sometimes on the part of managers. Such harassment is a problem for workers of all ages but is particularly serious when the victims are minors.

Low unemployment rates and labor shortages are making it more common for employers to turn to young workers to fill in the gaps. Yet we should make sure that these businesses do not break the rules when they do so. Other regulators should follow the lead of Massachusetts in getting tough with employers who exploit the most vulnerable workers.

Underregulation

The ink was barely dry on the 1970s laws creating the EPA, OSHA and other new federal agencies overseeing business activities when a counterattack began. For the past four decades, there has been an endless drumbeat of claims about the supposedly pernicious effects of regulation and continuous calls for weakening or eliminating rules.

This ongoing anti-regulatory campaign lets up only when a major incident – such as a massive oil spill or fatal industrial explosion – contradicts the argument that things would be fine if we let corporations manage their affairs with as little interference as possible. As soon as the uproar dies down, business apologists return to their customary posture, in the same way that the NRA handles mass shootings.

We are now in another of those periods, but with a significant difference. Instead of a single situation reminding us of the value of regulation, we now have multiple scandals at the same time.

It’s been clear for quite a while that reckless behavior by opioid producers and distributors – along with insufficient oversight by the FDA and DEA — was largely responsible for many thousands of overdose deaths. The industry has been hit with a wave of lawsuits and is now beginning to pay out billions of dollars in settlements.

It’s becoming clearer by the day that it was a monumental error for the FAA to cede oversight of the development of Boeing’s 737 Max to the company itself. Newly disclosed internal corporate documents indicate that Boeing was aware of safety problems with the plane and downplayed the risks in communicating with the agency.

It’s become apparent that Juul exploited the permissive approach of the FDA and marketed its vaping products not only to adult tobacco smokers trying to quit but also to young people, hooking many of them on nicotine for the first time. Now those young people are caught up in an epidemic of lung ailments linked to vaping.

The widespread wildfires in California are attributed in part to faulty transmission lines that PG&E has not adequately repaired and upgraded. Now the company is trying to mitigate the longstanding problem by imposing frequent blackouts on millions of customers.

Tech companies such as Amazon have taken advantage of weak antitrust enforcement to expand their dominance in a growing number of markets, forcing smaller companies into subservience or putting them out of business.

How many examples of corporate misconduct and feeble government oversight will it take to get across the message that in the vast majority of cases the problem is not overregulation but underregulation?

One significant obstacle is Donald Trump, who has embraced deregulation and likes to claim that weakening oversight, especially at the EPA, will promote job growth and prosperity. At a time when many large corporations are taking a more nuanced approach to social responsibility issues, Trump is touting crude anti-regulatory positions and climate-change denialism. In its latest move, the Trump EPA is reportedly planning to roll back an Obama-era regulation limiting emissions of heavy metals like arsenic, lead and mercury from coal-fired power plants.

Fortunately, many of Trump’s regulatory rollbacks are carried out in an inept way and get tied up in court. Yet the administration could still end up doing significant damage, if only in fostering the distorted idea that regulation-bashing is a populist position rather than a central part of the corporate agenda.

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.