The Department of Energy recently announced in the Federal Register a 60 day stay of its new regulation permitting civil penalties against contractors and subcontractors that retaliate against an employee reporting fraud, waste or abuse. The DOE cited the Chief of Staff’s January 20, 2017 memorandum, which calls for a 60 day delay in the effective date of new regulations so that they can be reviewed by the incoming administration.
We hope that the Trump administration will quickly review the rule and allow it to become law. An OIG study last year found that the DOE only infrequently used its enforcement authority to hold contractors accountable for retaliation. And the November settlement of the False Claims Act lawsuit against Bechtel and predecessors to AECOM for $125 million over waste disposal and nuclear materials at the Hanford Site is proof of the need for more encouragement for whistleblowers.
It is unclear whether the delayed regulation will be subject to the Presidential Executive Order on Reducing Regulation and Controlling Regulatory Cost, which was issued at the end of January. This Executive Order requires the proposed elimination of two regulations for every one new regulation issued.
Although frequently criticized for its handling of government whistleblowers, the DOE whistleblower protection rule was one of many advanced during the Obama Administration to protect whistleblowers. The SEC adopted rules to permit civil penalties against corporations that hampered employee communications with the SEC or retaliated against whistleblowers. Congress and the President also passed a similar rule to the DOE regulation as a condition of government spending in the Cromnibus budget bill a few years ago.
Congressional leaders have sent several letters to President Trump or members of the Trump Administration informing them of the importance of whistleblowers in the government. The first involved a letter by several members of the House or Representatives regarding the gag orders that did not have an exemption for government employees to communicate with members of Congress. The latest was from Senator Grassley to President Trump calling for a ceremony in the Rose Garden honoring whistleblowers.
The Obama Administration paid out $3 billion to whistleblowers for evidence of fraud. Whistleblower lawyers will continue to watch for evidence of how the Trump Administration, the Justice Department and Securities and Exchange Commission will treat their clients. This is one positive example that could be set by President Trump.