Leashes Come Off Wall Street, Gun Sellers, Polluters and More

The following article by Eric Lipton and Binyamin Appelbaum was posted on the New York Times website March 5, 2017:

Giants in telecommunications, like Verizon and AT&T, will not have to take “reasonable measures” to ensure that their customers’ Social Security numbers, web browsing history and other personal information are not stolen or accidentally released.

Wall Street banks like Goldman Sachs and JPMorgan Chase will not be punished, at least for now, for not collecting extra money from customers to cover potential losses from certain kinds of high-risk trades that helped unleash the 2008 financial crisis.

And Social Security Administration data will no longer be used to try to block individuals with disabling mental health issues from buying handguns, nor will hunters be banned from using lead-based bullets, which can accidentally poison wildlife, on 150 million acres of federal lands.

These are just a few of the more than 90 regulations that federal agencies and the Republican-controlled Congress have delayed, suspended or reversed in the month and a half since President Trump took office, according to a tally by The New York Times.

The emerging effort — dozens more rules could be eliminated in the coming weeks — is one of the most significant shifts in regulatory policy in recent decades. It is the leading edge of what Stephen K. Bannon, Mr. Trump’s chief strategist, described late last month as “the deconstruction of the administrative state.”

In many cases, records show that the changes came after appeals by corporate lobbyists and trade association executives, who see a potentially historic opportunity to lower compliance costs and drive up profits. Slashing regulations, they argue, will unleash economic growth.

On a near daily basis, regulated industries are now sending in specific requests to the Trump administration for more rollbacks, including recent appeals from 17 automakers to rescind an agreement to increase mileage standards for their fleets, and another from pharmaceutical industry figures to reverse a new rule that tightens scrutiny over the marketing of prescription drugs for unapproved uses. As of late Friday, word had leaked that the automakers’ request for a rollback was about to be granted, too.

“After a relentless, eight-year regulatory onslaught that loaded unprecedented burdens on businesses and the economy, relief is finally on the way,” Thomas J. Donohue, the president of the United States Chamber of Commerce, wrote in a memo last week.

But dozens of public interest groups — environmentalists, labor unions, consumer watchdogs — have weighed in on the potential threat to Americans’ well-being. “Americans did not vote to be exposed to more health, safety, environmental and financial dangers,” said one letter, signed by leaders of 137 nonprofit groups to the White House last week.

In other cases, the Obama-era rules under attack have drawn objections even from some liberal groups that called them examples of overreach, like the American Civil Liberties Union’s protest of a system to block mentally ill people from buying guns.

The regulatory retrenchment is unfolding on multiple fronts.

Congress, with Mr. Trump’s approval, has erased three Obama-era rules in the last month, lifting regulations related to coal mining and oil and gas exploration, as well as the sale of guns to the mentally ill. More than 25 more rules could also be erased in the coming weeks; the House has already voted to eliminate nearly half.

Mr. Trump has separately signed executive orders directing agencies to pursue the reversal of other rules, including a requirement that financial advisers act in the interest of their clients, and a rule aimed at protecting drinking water from pollution.

New White House appointees at agencies including the Federal Communications Commission, the Securities and Exchange Commission, the Interior Department and the Environmental Protection Agency have also personally intervened in recent weeks to block, delay or start the process to nullify other rules, such as a requirement that corporations publish tallies comparing chief executive pay with average employee wages.

The Trump administration has also imposed a broad regulatory freeze, instructing agencies to delay the adoption of any rules not already in effect, and to consider whether those rules should be targeted for elimination.

And it has set up barriers to enact any new regulations — such as a requirement that for each new rule, at least two others must be identified for repeal — and ordered every federal agency to create a team of employees to look for more rules that can be eliminated.

“By any empirical measure, it is a level of activity that has never been seen,” said Curtis W. Copeland, who spent decades studying federal regulatory policy on behalf of Congress while at the Congressional Research Service and the Government Accountability Office. “It is unprecedented.”

Mr. Trump, in his address to Congress last week, called it “a historic effort to massively reduce job-crushing regulations,” a line that drew thunderous applause from Republicans.

Presidents wield considerable influence over the rule-making process. They set the agenda and appoint the rule-makers, and, since the Reagan administration, a White House office has reviewed every major regulation to try to ensure that benefits to society exceeded compliance costs. It is not uncommon for new presidents to make quick changes in regulatory policy or try to reverse certain last-minute rules their predecessors enacted.

Barack Obama, shortly after being elected president, pressed the E.P.A. to let the State of California set more stringent limits on auto emissions, a proposal that the Bush administration had rejected.

But the courts have generally held that new administrations need to justify such reversals. The Reagan administration tried to rescind a rule requiring airbags in passenger vehicles. The courts found the move unjustified.

“It is not a relevant or adequate defense to say that the president told us to do it,” said Michael Eric Herz, a professor at the Benjamin N. Cardozo School of Law in New York.

The Trump administration could face a host of similar challenges — the requirement that agencies must find two regulations to eliminate before enacting any new rules is already being challenged in federal court.

In addition, Democratic attorneys general from New York, Hawaii, Massachusetts, Oregon and Vermont have threatened in recent days to sue the Trump administration to try to block some of the regulatory rollbacks.

It is a radical role reversal for state attorneys general — their Republican colleagues spent the last eight years suing the federal government to block the enactment of many Obama-era rules. Now the Democrats are planning to try to prevent many of these same rules from being revoked.

“Demolish the administrative state? I don’t even know what that means,” Attorney General Maura Healey of Massachusetts said during a visit to Washington last week, where she and other state attorneys general met with Mr. Trump at the White House.

The pushback has hardly deterred industry executives. The Business Roundtable, which represents some of the nation’s largest corporations and is led by Jamie Dimon, chief executive of JPMorgan Chase, in mid-February gave Mr. Trump a wish list of 16 rules it wanted killed, including the mandatory disclosure of how much chief executives are paid compared with other employees, and a rule intended to curb the trade in minerals that might benefit militant groups in parts of Africa. Efforts to repeal at least 10 of those measures are underway.

“The majority of these regulations directly and negatively impact economic growth,” the executives said in their letter, adding that they were convinced that rules could be repealed “without undermining critical protections for consumer health, safety and the environment.”

The reversals by federal regulators are happening, at times, at an extraordinary speed. Lawyers representing the National Mining Association, the American Petroleum Institute and other fossil fuel trade groups and companies asked the Interior Department on Feb. 17 to suspend a new rule changing the way these companies pay royalties for oil, gas or coal extracted from federal lands.

While the lawyers called the requirement “impractical and in some cases impossible,” environmentalists and conservative nonprofit groups like Taxpayers for Common Sense praised the effort, saying that for decades energy companies had been underpaying the federal government. The new standard was expected to push up federal revenue by as much as $85 million annually.

The Interior Department wrote the industry lawyers back five days later, telling them that the agency, after three years of backing the rule, would suspend enforcement of the new standards. “We agree you have raised serious questions,” the agency’s letter said.

This shift in federal regulatory policy is already having implications for tens of thousands of citizens nationwide.

Nearly two years ago, the Social Security Administration first moved to set up a new system that would automatically turn over to the Justice Department information it collects on Americans who are receiving federal benefits based on a disabling mental illness for inclusion in a database used for gun background checks.

This would effectively prevent these individuals — an estimated 75,000 a year — from buying guns unless they sought a Justice Department waiver after being rejected, given the longstanding federal limitation on the sale of firearms to individuals with known mental illnesses.

Groups like the National Rifle Association, the A.C.L.U. and the National Alliance on Mental Illness objected to the provision, which had been scheduled to go into effect in January. They argued that it unfairly presumed a tendency toward violence by a wide range of people with mental disabilities, including conditions like bulimia and obsessive compulsive disorder.

Mr. Trump signed legislation on Tuesday revoking that rule under the Congressional Review Act, which gives Congress a limited window to overturn the decisions of regulatory agencies.

A total of 46 such Congressional Review Act resolutions are now pending in Congress, on topics including air pollution, unemployment compensation, endangered species listings, debit card fees and oil and gas drilling on federal lands as well as the Arctic Outer Continental Shelf.

The act, first adopted in 1996, had been used only once before to nullify a regulation, at the start of the Bush administration in 2001, when a Clinton-era rule was revoked.

Rules not subject to congressional review may still be at risk. The most radical shift has perhaps come at the Federal Communications Commission, which voted on Wednesday to halt new government rules related to data security from taking effect this week, after objections were raised by companies including Comcast, Verizon and AT&T.

Ajit Pai, a Republican whom Mr. Trump recently named as the F.C.C. chairman, has also made clear that he intends to push to roll back or abandon several other major rules, including the landmark net neutrality regulation intended to ensure equal access to content on the internet, as well as efforts to keep prison phone rates down and a proposal to break open the cable box market.

The efforts have been praised by telecommunications giants, like Comcast, but condemned by consumer advocates.

The administration started its campaign against regulation on the afternoon of Inauguration Day, with a memo from Reince Priebus, Mr. Trump’s chief of staff, instructing agencies to halt work on new regulations and to delay putting completed regulations into effect.

So far, the effective dates of at least 75 rules have been delayed as a result of this order, based on an analysis of the Federal Register. That includes a measure intended to prevent potentially toxic formaldehyde exposure in homes caused by certain furniture products — an effort that has been underway since victims of Hurricane Katrina in 2005 were moved into contaminated government-issued trailers.

Such delays are not uncommon with new presidents — both George W. Bush and Mr. Obama did the same, to differing degrees. And certain measures are still going into effect as the Trump administration gets underway, including one that prohibits smoking in public housing nationwide as of Feb. 3.

Still, the general Trump administration freeze has drawn broad opposition, some of it surprising. The Department of Agriculture has delayed a rule that would make it easier for chicken farmers to sue chicken processors. Business groups, including the National Federation of Independent Business, want to kill the rule.

But small-scale chicken farmers are fighting back.

Mike Weaver, a West Virginia farmer who said he had voted for Mr. Trump and was pleased with most of what he had seen so far, said he wished Mr. Trump would meet with farmers.

“I’d love to have a visit with the president about this, to tell him that these are federal regulations, yes, but these are good regulations,” said Mr. Weaver, the president of a small-farm group called the Organization for Competitive Markets. “These are regulations that we want implemented.”