Gov. Tom Wolf’s waiver process, which allowed select businesses to reopen during the peak of the COVID-19 pandemic this spring, was a “subjective process built on shifting sands of changing guidance” that could be gamed, according to Auditor General Eugene DePasquale.
The initial findings come five months after DePasquale, a Democrat, announced he would review the Wolf administration’s plan to regulate businesses during the early days of coronavirus’s spread.
Overall 42,000 businesses applied for a waiver for two weeks in late March and early April. The waiver allowed businesses, from dog groomers to garden centers, deemed “non-life sustaining” to reopen if they followed safety guidelines and could prove their need amid the pandemic.
Of them, DePasquale’s office identified at least 500 applications whose response changed, whether a business had a waiver granted late, rescinded, or were told they didn’t need a waiver to open after all.
Just 6,000 were allowed to reopen, and the rest were denied a waiver — though updated guidance allowed some businesses to reopen early anyway.
DePasquale said that some companies, which didn’t use such phrases as “PPE” or “life-sustaining” — which is how Wolf described essential businesses — in their applications didn’t receive waivers, even as similar businesses opened.
Sometimes, business would even reapply with the buzzwords and be allowed to reopen, he added, even if the underlying business did not change.
“It is very clear to us that people that figured out the tricks in the waiver process application were finding out how to get a yes by putting key buzzwords in,” DePasquale said.
Overall, while DePasquale was critical of the program, he did not specifically target Wolf or provide reforms.
If Pennsylvania needed to once again shut down businesses during a potential new wave of rising cases, DePasquale was adamant that “we can’t have this Keystone Cops situation again,” referencing a 1910’s slapstick series.
DePasquale’s staff also reviewed nearly 600 pages of communications from lobbyists and lawmakers to the Department of Community and Economic Development, which processed the business waivers.
As was the case with using keywords, DePasquale said that businesses that reached out to their legislators were more likely to turn a “no” on a waiver to a “yes” and be allowed to reopen.
“I don’t knock a business owner for going to their legislator,” DePasquale, who served in the state House from 2007 to 2013.
Business owners that “were just trying to play it down the middle” and didn’t ask for assistance “got harmed for trying to play it down the middle. And I find that unacceptable,” DePasquale added.
DePasquale’s office was still reviewing whether any of the interventions by lawmakers or lobbyists crossed a legal or ethical line, DePasquale added.
In a statement, Casey Smith, a spokesperson for DCED, said that the department did not make waiver decisions based upon “pressure from the governor’s office or other outside influences.”
Smith also dismissed DePasquale’s assertion that using certain phrases could influence the outcome of a waiver application, arguing “it was important that businesses included descriptions of their business that appropriately described whether they offer life-sustaining services and/or PPE.”
“Reviewers applied federal advisory guidance, best practices, [codes], and commonwealth directives based upon medical advice that evolved daily as the commonwealth charted a path to provide guidance and certainty to businesses,” Smith added.
While DCED processed the waivers, the agency did not establish any guidelines for reviewing the applications. That task instead fell to senior Wolf administration officials.
The seemingly arbitrary standards described by DePasquale matches testimony in a federal civil rights lawsuit against the Wolf administration that argued that the business closure orders, among other pandemic restrictions, were unconstitutional.
A U.S. district judge last month agreed with the plaintiffs, which included both state lawmakers, county governments, and small business owners.
The ruling, by Judge William Stickman, was overturned on appeal in a federal circuit court. But Stickman’s decision still touched on many of DePasquale’s same critiques.
“I’m not sure we wrote down anywhere what ‘life-sustaining’ meant,” said top Wolf aide Sam Robinson in a deposition.
The list of what qualified as life-sustaining changed ten times between March and May, according to evidence cited in Stickman’s ruling. He called the whole process “shockingly arbitrary.”
Even if the administration was “acting in haste to address a public health situation,” Wolf was still “exercising raw governmental authority in a way that could (and did) critically wound or destroy the livelihoods of so many people,” Stickman wrote.
Business groups and lawmakers quickly seized on the initial findings as validation of longstanding criticism of Wolf’s business order, that sometimes left one competitor open and another closed, or shuttered small businesses even as big-box stores accepted customers.
For example, DePasquale found that 506 hair salons applied for a waiver. Of them, 497 were told they could not reopen.
The nine remaining salons were allowed to reopen on some conditions, such as lice removal, or to sell hand sanitizer. Auditors were set to follow up on three more applications.
The audit also found that some manufacturers of hand sanitizer and masks were originally forced to shutter before being allowed to reopen after a further review by administration officials.
“This damning report begs the question, how do all the small businesses hurt by this unfair program recoup their losses and regain their trust in Gov. Wolf’s leadership?” Gordon Denlinger, president of the state chapter of the National Federation of Independent Businesses, said in a statement.
The audit’s reception by such business groups as the NFIB differed to the response by the Pennsylvania Manufacturers Association last month.
At a press conference, the group’s president and CEO, David Taylor, seized on political donations from Wolf to DePasquale’s congressional run to dismiss the coming audit, and accused DePasquale of failing to uphold the public trust.
In September, the Capital-Star reported that DePasquale took $11,200 from Wolf and his wife, Frances since last fall — including $5,600 while DePasquale was in the middle of the waiver audit.
At the time, DePasquale said the audit was delayed due to the transition from in-person to remote work.
But “because of the circumstance in which the auditor general has placed himself, those assertions” for the delay by DePasquale “are not believable,” Taylor said.
The event was organized by GOP U.S. Rep. Scott Perry’s, R-10th District, reelection campaign. In a statement Tuesday, Perry still called for DePasquale to “ explain to the people of Pennsylvania why he took the money.”
DePasquale, who is term-limited out of office, is challenging Perry in November in one of the most closely watched congressional contests in the country.
Full findings from the review are still to come, DePasquale said. He had recently requested extra documents from the administration, including lobbyists communications directly with Wolf’s office over waivers.