Overnight Regulation: Labor IG to investigate tip-pooling rule | Mulvaney reportedly puts brakes on Equifax probe | Dems want new restrictions on Comcast

Welcome to Overnight Regulation, your daily rundown of news from the federal agencies, Capitol Hill, the courts and beyond. It’s Monday evening and we are once again staring a potential shutdown in the face. Democrats leave for their retreat Wednesday, ahead of Thursday’s funding deadline. Also today: The Dow fell more than 1,000 points in its biggest daily point drop ever and President Trump accused Democrats of “treasonous” behavior at his State of the Union. Now on to regs news…

 

THE BIG STORY:

The Department of Labor’s Office of Inspector General announced Monday it will look into the agency’s rulemaking process in issuing its proposed tip-pooling rule.

The OIG on Twitter shared a memo it sent to Bryan Jarrett, acting administrator of the Labor Department’s Wage and Hour Division, on Monday.

“The Office of Inspector General is initiating an audit of the rulemaking process used by the Wage and Hour Division related to its proposal to rescind portions of its tip regulations issued pursuant to the Fair Labor Standards Act,” Elliot Lewis, assistant inspector general for audit, wrote.

{mosads}

The audit follows a Bloomberg Law report that senior agency officials hid an unfavorable economic impact analysis from the proposed rulemaking. The analysis reportedly showed workers could lose billion of dollars in gratuities if the agency rescinds an Obama-era ban on tip pooling.

The rule would change the Fair Labor Standards Act to allow employers to pool only the tips of workers who make at least the federal minimum wage, which is $7.25 an hour.

The proposal is backed by the National Restaurant Association, which says it will help to eliminate pay disparity between waiters and other servers and those in the back of a restaurant, like kitchen workers. But critics worry it will allow employers to take away tips earned by workers.

Lydia Wheeler has more on the IG probe here.

 

More on the tip pooling rule…

Attorneys general in California and 16 other states are pushing the Labor Department to withdraw its proposed tip-pooling rule.

In a 12-page letter Monday led by California Attorney General Xavier Becerra (D), Illinois Attorney General Lisa Madigan (D) and Pennsylvania Attorney General Josh Shapiro (D), the state officials said the rule contradicts centuries-old employee and consumer expectations about tipping, and threatens to seriously injure workers and deceive consumers.

The attorneys general said if recent reports are true, the Department of Labor (DOL) could have broken the law in rolling out its plan to rescind the Obama-era ban on tip-pooling.

The attorneys general said the Administrative Procedure Act “requires the agency to make available to the public, in a form that allows for meaningful comment, the data the agency used to develop the proposed rule.”

Becerra, who routinely challenges the Trump administration’s policies in court, said in a statement the California Department of Justice is prepared to use every tool at its disposal to protect hardworking Americans.

More from Lydia Wheeler here.

 

ON TAP FOR TUESDAY

The Senate Banking, Housing and Urban Affairs Committee will hear from the heads of the Securities and Exchange Commission and Commodity Futures Trading Commission on regulating cybercurrencies.

A Senate Health, Education, Labor and Pensions subcommittee will look at providing retirement savings for so-called gig economy workers.

A Senate Commerce subcommittee will hear from the chief information security officer of Uber and other cyber experts on that company’s data breach.

A House Energy & Commerce subcommittee holds the latest hearing on Energy Department modernization, this time focusing on the country’s nuclear infrastructure.

The House Financial Services Committee holds a hearing to review the annual report on the Financial Stability Oversight Council.

A House Homeland Security subcommittee holds a hearing on ensuring effective and reliable alerts and warnings. The hearing comes after last month’s fake missile alert in Hawaii.

The House Committee on Natural Resources holds a hearing on three bills dealing with national monuments, including one to create a national monument to honor slain civil rights leader Medgar Evers.

A House Education and the Workforce subcommittee holds an oversight hearing on the Mine Safety and Health Administration. Lawmakers will hear from Assistant Labor Secretary David Zatezalo.

 

REG ROUNDUP

Finance: White House budget director and Consumer Financial Protection Bureau (CFPB) chief Mick Mulvaney has dialed back the agency’s investigation into a massive data breach at Equifax, Reuters reported Sunday.

Mulvaney has not sought subpoenas or sworn testimony as part of the investigation, Reuters reported, citing three unnamed sources. The bureau has also put on hold plans to test how Equifax protects data.

A CFPB spokesman told Reuters the agency is not allowed to acknowledge an open investigation.

Former CFPB Director Richard Cordray authorized a probe last September into how hackers were able to steal personal data from Equifax in a data breach that affected nearly 150 million Americans.

Sylvan Lane has the story here.

 

Democrats were quick to blast Mulvaney over the report.

Senate Minority Leader Charles Schumer (D-N.Y.) said it was part of the Trump administration’s agenda of “rigging the system to benefit the most egregious corporate actors.”

“First the Trump administration gave lavish tax breaks to corporate CEOs and wealthy investors, now the Trump administration’s hand-picked saboteur is essentially handing out get out of jail free cards to Equifax executives,” Schumer said in a statement, referring to CFPB leader Mick Mulvaney.

More from Sylvan here.

 

Finance: Jerome Powell was sworn in as Federal Reserve chairman on Monday, pledging to boost transparency and build on nearly a decade of financial stability.

Powell, a Republican first appointed to the Fed in 2012, succeeds Janet Yellen, the first woman to lead the central bank, who had served since 2014.

Powell said in a taped statement that he was “humbled and honored” to lead the Fed while it mulls how to reset monetary policy before an expected recession.

“As I begin my term, I want to stress my commitment to explaining what we’re doing and why we are doing it,” Powell said. “My colleagues and I at the Federal Reserve will put everything we have into serving you and our country with objectivity, independence, and integrity.”

The Fed only has three seated governors, one shy of its official quorum. The bank will not be able to approve major financial regulatory actions until the Senate confirms another governor. President Trump has nominated Carnegie Mellon economics professor Marvin Goodfriend to the Fed board and is expected to nominate a Fed vice chairman within months.

Sylvan Lane has the story.

 

Finance: Wells Fargo CEO Timothy Sloan said Monday he expects the Federal Reserve to lift penalties put on his bank by the end of the year.

Sloan said on Fox Business that Fed’s stunning decision to oust four Wells Fargo board members and freeze the bank’s growth “a disappointment,” but not a fatal blow.

“We expect to have this cap lifted because again, all of the activities that the Fed would like us to improve on are the same ones that we would like to improve on,” Sloan said. “And we believe it’s likely that the asset cap could get lifted by the end of the year.”

The Fed announced Friday that it will ban the bank from doing anything that would increase its total consolidated assets above their December 2017 levels. Wells Fargo will still be able to issue loans and take deposits, but is expected to lose hundreds of millions of dollars in revenue.

Read more from Sylvan here.

 

Tech: Sen. Richard Blumenthal (D-Conn.) and Mignon Clyburn, a Democrat on the Federal Communications Commission, want regulators to renew restrictions on Comcast that were imposed as a condition for approving its 2011 merger with NBC.

The two Democrats argued in an op-ed for Bloomberg that letting the conditions expire could allow Comcast abuse its power and hurt competitors.

“For the majority of Americans who still get their video from pay-TV providers, and for the growing number who rely on an online video distributor, the expiration of the merger conditions brings a less competitive marketplace,” Clyburn and Blumenthal wrote.

The conditions expired last month. Some Democrats worry that because the FCC has now repealed its net neutrality rules, internet providers will be able to prioritize content without restrictions.

Clyburn and Blumenthal want the FCC to either extend the expired rules or impose new ones that would prevent Comcast from favoring NBC content or engaging in other discriminatory practices.

Harper Neidig has the story here. 

 

Environment: President Trump hasn’t yet decided whether to support a treaty amendment that seeks to phase out the use of certain potent greenhouse gases, an adviser said.

George David Banks, Trump’s adviser for international environmental policy, said at a Monday event that he and colleagues are still analyzing the 2016 pact to see if they’ll recommend that the president support it.

The Kigali Amendment, negotiated in part by the Obama administration, changed the 1987 Montreal Protocol to work toward a global phaseout of hydrofluorocarbons (HFCs), commonly used in refrigerants and air conditioning. They are hundreds of times more potent as greenhouse gases than carbon dioxide.

Domestic companies that make and use the chemicals support the amendment, as do environmental groups.

Timothy Cama has the details.

 

Environment: An environmental group on Monday threatened to sue the State Department if it doesn’t produce its overdue U.S. Climate Action Report to the United Nations.

In a letter, the Center for Biological Diversity (CBD) asked Secretary of State Rex Tillerson to produce the seventh annual report on climate change that is mandated under the United Nations Framework Convention on Climate Change (UNFCC). The report was due Jan. 1.

“The State Department has failed to submit the Seventh Climate Action Report by the mandated due date, much less issue any statements of the report’s preparation, draft texts, and notifications of public comment opportunities for the report’s final issuance — a process that has, in the past, taken over a year,” the letter read.

The report is a requirement for countries that are part of the UNFCCC, which was created with the goal of stabilizing the greenhouse gas concentrations in the atmosphere. Participants, of which the U.S. is one, are obligated to submit “national communications” on their greenhouse gas emission inventories and develop mitigation plans.

Miranda Green explains the fight here.

 

Tech: New Jersey on Monday became the latest state to implement its own net neutrality rules following the Federal Communications Commission’s repeal of the Obama-era consumer protections.

Gov. Phil Murphy (D) signed an executive order prohibiting all internet service providers that do business with the state from blocking, throttling or favoring web content.

“While New Jersey cannot unilaterally regulate net neutrality back into law or cement it as a state regulation, we can exercise our power as a consumer to make our preferences known,” Murphy said in a statement.

Harper Neidig has the story here.

 

Courts: The Supreme Court on Monday denied Republican requests to delay a Pennsylvania state court ruling requiring the state’s congressional map be redrawn. The decision increases the likelihood that the map will be redrawn ahead of November’s midterms.

Pennsylvania is a fierce battleground state, with a half-dozen House seats now held by Republicans seen as competitive.

If the legislative map is redrawn in a way that benefits Democrats, it could help the party in its drive to retake the House. Republicans currently control 12 of Pennsylvania’s 18 congressional districts.

Justice Samuel Alito, the member of the court who hears emergency requests from states, denied the efforts  — one from state GOP lawmakers and another from Republican voters in the state — for a stay of the Pennsylvania Supreme Court’s January ruling that the state’s congressional map had been drawn in a way that unfairly favored Republicans.

Lydia Wheeler, Lisa Hagen and Avery Anapol explain the court fight here.

 

Health care: A top Trump administration official says Medicaid work requirements are a form of “true compassion” that aim to help poor people overcome poverty.

“True compassion is lifting Americans most in need out of difficult circumstances,” Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma said in a Washington Post column Monday.

“This administration stands for a policy that makes Medicaid a path out of poverty by empowering states to tailor programs that meet the unique needs of their citizens,” Verma wrote.

On Friday, Indiana became just the second state in the 53-year history of the Medicaid program to gain federal approval to institute work requirements on Medicaid beneficiaries.

Nathaniel Weixel reports.

 

Interior: The Department of Interior (DOI) appears to be moving full speed ahead with an ambitious reorganization plan and will pilot the first regional office concept in Alaska.

In a letter first obtained by E&E News Friday, the director of Interior’s Office of Intergovernmental and External Affairs, Todd Wynn, expanded on the department’s proposed restructuring, which would include “revamped boundaries” for 13 proposed regional hubs.

The seven-page document containing a list of 39 “frequently asked questions” was sent to state and local stakeholders Jan. 19. It also detailed plans to initiate the change in Alaska because the state has a “large geographic area, most bureaus are active there, all existing regional offices are already in the same city, and there is only one state government with which to interact.”

Timothy Cama has the story here.

 

Environment: The head of the Environmental Protection Agency (EPA) once called President Trump an “empty vessel” when it comes to his knowledge of the Constitution, CNN reported on Monday.

Scott Pruitt criticized then-candidate Trump’s ability to uphold the Constitution as president in an interview with an Oklahoma radio show in February 2016.

“I think he’s an empty vessel when it comes to things like the Constitution and rule of law,” Pruitt said on the “Exploring Energy” radio show. “I’m very concerned that perhaps if he’s in the White House, that there may be a very blunt instrument as the voice of the Constitution.”

Pruitt at the time of his comments was backing Jeb Bush’s Republican presidential campaign.

Read more from Miranda Green here.

 

IN OTHER NEWS

Wells Fargo rebuke puts bank boards in Fed’s crosshairs (The Wall Street Journal)

Rent controls gain support as costs soar (The Wall Street Journal)

Anglo American swipes at South African mining regulation (Financial Times)

State GOP lawmakers want to weaken regulation of Wisconsin wetlands (Milwaukee Journal Sentinel)

Montana has little regulation of home schools, and parents are just fine with that (The Missoulian)

Over $60 billion wiped off value of cryptocurrencies as bitcoin drops below $8,000 again (CNBC)