Trump & the Supply Chain
Trump Truck Driving Alex Wong / Getty

Republican Regulatory Reform Agenda Advances Under the Radar

The focus on political turmoil and scandal diverts attention from progress in dismantling the regulatory edifice erected during the Obama era.

Congress and healthcare. Russia and the election. Trump and Twitter. Syria and North Korea. With all of the other headlines dominating the news these days it is easy to lose sight of many other things going on, including the steady, if shambling, progress towards achieving real regulatory reform at the federal level.

If the progress has been stop and start, a large part of the reason is that many high-level posts in the Trump Administration have yet to be filled. This is not just because of foot-dragging by Senate Democrats in approving Trump nominees, either. There are literally hundreds of empty positions Trump has not nominated anyone to fill.

The President asserts that many of these positions are duplicative and unnecessary. That may very well be the case for some of them, but many are essential to achieving his goals.

According to news reports Transportation Secretary Elaine Chao is stymied in developing infrastructure and other policy initiatives because so many presidentially-appointed posts in her agency remain unfilled, including heads of the Federal Highway Administration, Federal Motor Carrier Safety Administration, Federal Railroad Administration and National Highway Traffic Safety Administration.

Other cabinet level agencies that lack needed people in positions below the secretary level include the Departments of State, Defense, Education, Energy and Labor, to name just a few beyond the Department of Transportation.

Internal Revenue Service Commissioner John Koskinen, who clashed with congressional Republicans during hearings and who has been accused of misleading Congress about IRS actions targeting conservative organizations, is still beavering away in his post. The Presidentially-appointed IRS Oversight Board has so few members it no longer can make a quorum and thus has suspended operations.

Many of these positions are responsible for writing the regulations and policies Trump and his allies in Congress seem to want to take shape, but that won’t happen until the Administration moves to fill these posts.

In addition, the President’s budget proposal would slash the federal workforce in many departments and agencies, which may stem the tide of federal regulations. For example, Trump’s budget would cut DOT staff by 13%.

The Department of Labor would see its budget shrunk by 20.7%, and the Environmental Protection Agency by 31.4%. However, facing opposition in Congress even from Republican members, Trump’s budget proposal is not likely to survive intact.

In spite of the delays in appointing officials, there were some areas where actions taken by the previous Administration have been overturned with the stroke of a pen, especially when Congress and the President are agreed. On March 27 Trump signed a congressional resolution reversing an attempt to blacklist federal contractors who have records of pending and settled labor charges against them.

Adopted in 2014 but under a court stay since last year, the rule would have required companies bidding on federal contracts of $500,000 or more to report all administrative merits determinations, arbitral awards, or decisions and civil judgments regarding 14 federal statutes and executive orders, and all similar state laws.

Companies reporting such violations could have then been blacklisted from federal contracting and the information gathered made public to be used for target acquisition by unions and tort lawyers. The rule was made even more controversial because it included cases that were in the process of being appealed by the employers.

 

You Want Us to Do What?

When it comes to regulatory reform, Trump has been taking some other actions that are designed to make that reality, with or without the help of Congress.

On March 25 the President issued a detailed order directing all federal agencies to establish Regulatory Reform Task Forces charged with eliminating or changing all regulations deemed unnecessary and burdensome. The head of each agency will appoint a regulatory reform officer by April 25 who will form the task force.

Task force members are directed to closely examine any rules that damage job creation, and are outdated, ineffective, impose costs that outweigh benefits, and otherwise may interfere with the President’s initiatives and policies. To make sure that each task force is held accountable, the parent agency is required to measure and report all progress made toward achieving these goals.

A major plank of Trump’s campaign platform, and one that he has strongly recommitted to, is his goal of making sure that federal agencies remove two regulations for every new one they issue. However, he also has stressed that this would not apply to rules involving security, safety and health issues—which excludes a huge chunk of the Code of Federal Regulations.

The Trump Administration cannot quickly and easily withdraw regulations that were in place before the last 60 days of the Obama Administration. Those latter “midnight regulations” can be pulled under new laws passed by Congress.

In addition, new rulemaking proceedings and laws can be enacted that would soften the impact of earlier regulations on business, but that process is time-consuming. Federal law requires agencies to take certain defined procedural steps before issuing a final rule, sometimes taking up to a year or more.

This is where Trump’s failure to fill many positions below the secretary level hurts. Those officials are not only responsible for policy development, but some of them also are responsible for supplying the needed legal expertise to pursue regulatory reform.

A good example of what can happen when positions go unfilled is the lawsuit challenging the Labor Department’s overtime rules, which have been in limbo since late last year when they were stayed while undergoing court challenge.

The Administration also can choose not to defend the rules in federal court. But because of its slow start in getting policymakers hired—including the drama surrounding getting a Labor Secretary in place—the government has been granted two filing extensions by the court, and the new deadline for the government is May 1 to state whether it will defend the rules or not.

Some Republicans in Congress have floated the idea for a new overtime salary threshold of $35,000 rather than $47,476 set by Obama’s DOL. The current threshold of $23,600 was set in 2004. But a new approach can’t be pursued until senior Labor Department officials are in place.

 

OSHA Changes Keep Coming

Falling squarely in the stated exclusion zone in regard to Trump’s two-for-one rulemaking order is the Occupational Safety and Health Administration, but that doesn’t mean the Administration isn’t taking action to upend some of its more controversial actions.

The President recently signed into law legislation passed by Congress overturning an OSHA rule ordering employers with 10 or more employees to retain injury and illness records for at least five years. Seen as a “midnight regulation” handed down by OSHA two days before Trump’s inauguration, the rule was an attempt to work around an earlier federal court decision telling the agency it could not bring recordkeeping charges against an employer for reports more than six months old.

What is not known at this point is whether the Administration will act in regard to another unpopular OSHA rule requiring employers to file regular injury and illness reports electronically. Adopted last year, it is currently being challenged in a federal court which recently announced it won’t decide until after the July 1 effective date for employer compliance.

Similar to the federal contractor blacklisting rule, employers see mandating the posting of these reports on the Internet for all to see would only create an easily-accessed happy-hunting-ground for union organizers and tort lawyers.

Even if these changes take place, don’t expect the agency to completely reverse course. At a recent American Bar Association meeting, top acting OSHA officials (their replacements have not yet been named) declared that the agency’s pursuit of its enforcement efforts will continue uninterrupted. This includes its focus on using enterprise-wide enforcement and other programs such as the Severe Violator Enforcement Program designed to bring employers into line.

The officials stressed that the key elements in corporate-wide settlements will continue to include implementation of a safety and health management system, use of third-party consultants and providing OSHA with access to periodically monitor implementation of the settlement.

What could be in for a change is OSHA’s ratcheting upward of employer penalties on an annual basis, which began last year. For 2017, the current maximum penalties are $126,749 for willful and repeat violations, and $12,675 for violations in the serious, other-than-serious and failure-to-abate categories.

More routine penalties also continued to increase during the Obama era. For employers with fewer than 10 employees the average penalty in 2015 was $2,297 compared to an average $3,080 penalty issued in 2016. Similarly, large employers with more than 250 employees saw their fines almost double, from $5,915 in 2015 to $10,065 in 2016. For all employers, both big and small, the average penalty increased from $3,285 to $5,087 in 2016.

OSHA officials admit that the increase in penalties likely caused a spike in the number of citations challenged by employers. In 2015 about 7% of citations were contested by employers and in 2017 that number rose to nearly 10%.

The overall number of inspections OSHA conducts could drop further if the already-understaffed agency suffers more staff cuts under the Trump Administration. In fiscal year 2015 it conducted approximately 35,820 inspections but for FY 2016 only about 31,948, largely because it had fewer compliance officers to carry them out.

There also is evidence that OSHA may be backing away somewhat from its emphasis on the “public shaming” of employers—Obama Administration officials’ actual words. The agency recently sought to publicize a renewed safety campaign encouraging employer emulation of best practices and adoption of a systemic approach to promoting health and safety.

“Whether this news release and these associated webpages signal a change in the overall approach OSHA will take under President Trump’s new Administration is yet to be seen, but this is not the tone we have seen from OSHA in the last several years,” noted the attorneys Brent Clark and Craig Simonsen of the Seyfarth Shaw law firm.

 

Promoting Trucking Productivity

Although President Trump had little to do with either of them, two recent actions promise to improve logistics productivity by creating regulatory relief for the trucking industry.

One was action taken by the DOT Inspector General that appears to have finally put out of its misery the 34-hour restart provision included in the federal government’s hours-of-service regulations for commercial drivers.

The death knell was sounded on March 2 when the DOT IG informed Transportation Secretary Elaine Chao and the involved congressional committees that a research study mandated by Congress found the restart provision was essentially useless when it came to promoting safety.

When Congress voted late last year to continue its suspension of the restart rule, the legislation stated the provision would only be allowed to continue if a mandated DOT study could show that the restart rule substantially improved safety.

According to the DOT IG, the research “did not explicitly identify a net benefit from the use of the two suspended provisions of the restart rule on driver operations, safety, fatigue and health.” To reach their conclusion, DOT researchers compared drivers’ schedules, analyzed events like accidents and near accidents, and studied driver alertness and health.

Originally adopted in 2013 by the Federal Motor Carrier Safety Administration, the provision was first suspended by Congress late in 2014. During the period when it was in effect, it is estimated to have cost carriers and shippers 3-6% in lost trucking productivity.

The restart provision was strongly supported by the Teamsters union, and actively opposed by independent owner-operators and for-hire fleets.

On March 22, President Trump held a public meeting with truck drivers and fleet executives at the White House, even seizing the opportunity to be photographed taking a pugnacious pose in a truck cab. In his remarks he promised to improve trucking productivity through his ambitious infrastructure plan, but didn’t discuss other government actions except in general terms.

But just before that event took place, FMCSA withdrew a controversial safety fitness rule it had proposed for truckers. The Compliance, Safety, Accountability (CSA) program had drawn criticism since its inception for resulting in blacklisting fleets based on what were said to sometimes be faulty and out-of-date data. Truckers have said the program needs a top-to-bottom overhaul.

The FMCSA proposal would have done away with the “Conditional,” “Satisfactory” and “Unsatisfactory” rating system, in favor of a simple “Fit” or “Unfit” designation. A new version of the rule is expected following completion of another research study, this one mandated by Congress as part of the last highway program bill.

Other regulatory changes also are occurring in other provinces of the federal dominion, and more are sure to come when the Trump Administration puts more of its people in place throughout the government—and if it can ever take a break from the unceasing distractions that seem to surface every day.

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