Former White House advisor Steve Bannon proposed the “deconstruction of the administrative state.” Here’s what that looks like. (Jonathan Ernst/Reuters)
It took almost two years for two dozen officials at the Consumer Financial Protection Bureau to pull together a case against Golden Valley Lending and three other online lenders that were making small short-term loans at interest rates as high as 950 percent, violating laws in at least 17 states that cap interest rates. “The average rate that the infamous Cosa Nostra mob charged in New York City in the 1960s was 250 percent,” said Christopher L. Peterson, a former CFPB attorney now teaching at the University of Utah College of Law. “These firms were charging almost four times as much.” Last October, the agency finalized a rule to stop “payday debt traps” by requiring lenders to determine whether people can afford to repay their loans.
Yet a few months later, after President Trump’s budget director, Mick Mulvaney, took over the CFPB, it unceremoniously dropped the case, telling a federal judge in Kansas that it would “continue to investigate the transactions that were at issue.” Golden Valley is still doing business; its Web site says: “Get the money you need. It’s easy!”
Mulvaney has all but halted the enforcement of certain government regulations. He stripped the bureau’s fair-lending unit of enforcement power and redefined it as an advocacy office. His predecessor, Richard Cordray, appointed by President Barack Obama and now the Democratic nominee for governor in Ohio, unveiled an average of 3.1 cases a month over nearly six years. Mulvaney has filed just six cases in nine months (including two against payday lenders), and at least two of those were initiated under Cordray.
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The CFPB is just one of a host of agencies that, under Trump, are not vigorously enforcing the law. The administration’s strenuous efforts to transform the government — especially by rolling back measures like the Obama-era fuel-economy standards and shrinking the size of protected wilderness areas — have been well documented and bitterly fought over. But the “deconstruction of the administrative state,” as former White House adviser Stephen Bannon once put it, has another, far less heralded side: the administration’s passive approach. From labor violations to financial crimes to climate protections, the Trump administration’s profound effect on American life may result just as much from the enforcement actions it doesn’t take as the ones it does.
As the United States grew in size and complexity, Congress created agencies to oversee activities it didn’t have the expertise to handle, mostly to protect citizens. 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 meatpacking industry in “The Jungle” spurred the creation of the Food and Drug Administration in 1906. The Great Depression prompted Congress to establish the Securities and Exchange Commission in 1934, and President Richard Nixon signed a bill creating the Environmental Protection Agency in 1970, after a California oil spill and the Love Canal toxic chemical dump. The CFPB was Washington’s answer to the Great Recession of 2009.
Libertarians and conservatives began, in the 1970s, to disparage these groups as “unelected bureaucrats” who were essentially governing without the consent of the people. President Ronald Reagan “portrayed the regulatory state as an enemy of democracy, whereas people in the New Deal saw it as an agent of democracy,” says William J. Novak, a professor at the University of Michigan Law School. It was a political winner: Almost every American president since Nixon has sought to show that he could rid the government of needless or wasteful regulation. Vice President Al Gore, tasked by President Bill Clinton with reducing red tape, liked to display 10 pages of regulations for federal ashtrays, including precise measurements of the number and size of fragments that should result if they shattered.
What the Trump administration is doing, however, is different. It is not a matter of ashtrays and waste. Key agencies appear to have backed off the enforcement of regulations even when action to protect citizens is essential to the spirit of the laws.
This is not something presidents are allowed to do, the courts have said. Their “authority does not extend to the refusal to execute domestic laws,” then-Justice John Paul Stevens wrote in an April 2007 case ordering the George W. Bush administration’s EPA to draw up regulations limiting greenhouse gas emissions, as required under the Clean Air Act.
Now the EPA is again putting off its obligations. In the year after Trump took office, civil cases brought by the Justice Department for pollution violations fell 44 percent and penalties dropped by 49 percent, according to figures assembled by the Environmental Integrity Project, a watchdog group of former enforcement attorneys, public interest lawyers and analysts. In a report, the group said the Trump administration had lodged consent decrees for 48 civil cases against polluters and collected $30 million in penalties from Inauguration Day through Jan. 20, 2018, a reduction of more than half from the first year of the previous three administrations. The report also highlighted15 cases of industrial facilities that received notices from the EPA for serious violations of air pollution limits before the Trump administration took office; only two have been resolved, and one of those incurred no penalty and only $1,100 in compliance actions.
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A veteran enforcement official at the EPA, who spoke on the condition of anonymity to avoid disciplinary action, says things could get worse, because the agency is withdrawing funding for enforcement long delegated to state environmental bodies. One possible example: The Ohio Environmental Protection Agency has been tangling with Energy Transfer Partners over a pipeline construction project that has polluted some wetlands and rivers; the company claims that Ohio has no jurisdiction. The federal EPA has said it will take over some activities from the states, but the official says the agency has no intention of carrying out enforcement of state issues. “We have an EPA under Trump that is reducing its enforcement and exposing Americans to a lot more pollution, and it’s not what EPA is supposed to be doing,” says Tom Pelton, the Environmental Integrity Project’s communications director. “We do have laws that were passed, such as the Clean Air and Clean Water acts. There is supposed to be enforcement.”
Elsewhere, at the Commodity Futures Trading Commission, the number of enforcement cases fell 28 percent in fiscal year 2017 — which included the first eight months of the Trump presidency — compared with the previous year. The commission collected only one-third as much in fines. J. Christopher Giancarlo, appointed CFTC chairman by Trump, has backed a “self-reporting” plan for companies. (The program is “designed to help the Division [of Enforcement] identify more culpable wrongdoers and hold them accountable,” he said.)
The Education Department, meanwhile, scaled back a team of about a dozen lawyers and investigators looking into alleged abuses by for-profit colleges, according to a report in the New York Times. Only three people were left on the team this spring. Many of the people hired at the department by Education Secretary Betsy DeVos have come from for-profit colleges. And the department has issued new guidelines allowing its civil rights office to dismiss hundreds of civil rights complaints the agency now considers too burdensome.
The administration’s overall attitude toward regulation helps set the attitudes of officials in charge of inspections and enforcement. “The tone at the top matters hugely in regulatory agencies,” says Michael Bromwich, who was director of the Bureau of Safety and Environmental Enforcement for offshore drilling under Obama. Bromwich pointed to the agency’s new head, Scott Angelle, a Louisiana politician who has promised to be “partners” with the energy industry and to eliminate “unnecessary regulatory burdens.” He quickly began unwinding rules on well control and production safety that had been years in the making. Inspectors may think twice before issuing a violation notice that could be appealed up the bureaucratic chain, Bromwich said. “Field-level personnel responsible for enforcing the regulations get the message loud and clear. That doesn’t mean they won’t do their jobs, but inevitably it has an impact.”
It’s often difficult to pinpoint why an agency might not enforce a law. It can be a result of insufficient manpower or a new focus for investigations, for instance. “The biggest thing is head count. We’re doing less with less,” said a lawyer who spent 15 years at the Securities and Exchange Commission. “Then it gets into prioritizations. What are the priority areas that the head of the agency or commission is pushing?” Many former SEC lawyers praise the current chairman, Jay Clayton, saying he has not backed off but rather shifted the agency’s resources to pursue cases involving cryptocurrencies, a new frontier. (The structure of the commission, with five members, also makes it hard to ignore strong cases.)
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And some departments have continued their enforcement work uninterrupted. At the Labor Department, Secretary Alexander Acosta asked Congress for an additional $6.1 million for enforcement, about a 3 percent increase and enough to fill 42 new positions. “These laws matter. They’ve been passed by Congress. They are the laws of the land,” Acosta told a congressional committee this year. “They need to be enforced.” The Labor Department cited more coal mines for violating regulations in 2017 than in 2016.
But in the Trump era, that’s an unusual approach. More common is the philosophy that led to the Transportation Department’s recent censure: When the department’s National Highway Traffic Safety Administration told car companies last summer that it would indefinitely delay Obama’s higher fuel-efficiency standards, critics brought a lawsuit in the U.S. Court of Appeals for the 2nd Circuit, which held that the agency had “exceeded its statutory authority,” cloaking its policy reversal as a mere postponement.
A refusal to enforce laws is, in some ways, even more serious than the rollback of regulations. Those changes require approval from Congress or, in the case of a new rule, adherence to a rigid script that calls for public hearings and allows appeal to the courts. The Trump administration’s path, by contrast, leaves little recourse for its opponents. What are good-government activists and consumer-protection advocates supposed to do when the government declines to sue a bank that defrauds its clients, or punish an oil and gas company for spewing forbidden pollutants from its storage tanks and flares? Indeed, they might not even know it’s happening.
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