Waivers audit: ‘Keystone Kops routine’
Ongoing review points to early pandemic measure as puzzling, inconsistent, subjective
The process to determine which Pennsylvania businesses could keep operating in the early days of the coronavirus pandemic was inconsistent and “remarkably subjective,” an initial review by Pennsylvania Auditor General Eugene DePasquale’s office has found.
Throughout the two-week window for the business waiver application process, which concluded April 3, and in the weeks after, DePasquale said, at least 523 businesses received responses that changed from the state Department of Community and Economic Development.
That included 171 waiver applications that were initially rejected only to be approved later. DePasquale’s audit found it “particularly puzzling” why some of the applications were denied in the first place, considering eight applications clearly stated they were manufac
turing or selling hand sanitizer, masks or other personal protective equipment.
The auditor general’s initial review also found a “lack of consistency” in some instances. For example, two garden centers in Cumberland County were allowed to open while two similar businesses nearby were not. But then, on May 4, the waivers for the two garden centers were rescinded by DCED, which notified the businesses they would have to close, without a reason for the change.
“The waiver program appeared to be a subjective process built on shifting sands of changing guidance, which led to significant confusion among business owners,” said Tuesday.
In a statement, DCED spokesperson Casey Smith pointed out that Pennsylvania was one of just a few U.S. states to implement this kind of business exemption process, something rolled out in a matter of days to ensure as many life-sustaining services as possible could remain open.
She said agency reviewers made decisions based on information submitted by businesses, and implemented a process to confirm that details provided by businesses accurately depicted their day-to-day operations.
While the majority of businesses provided accurate information, Smith said some submitted multiple applications and “unfortunately, a few misrepresented themselves.” She noted that only a “fraction of the requests required correction” through the review process.
“While there were some inconsistencies noted, we worked to address any inconsistencies, and overall the process was consistent given that our commonwealth was responding to a global pandemic from a novel virus and prioritizing public health and safety,” Smith said.
Others, such as the National Federation of Independent Business, took DePasquale’s interim findings as justification that the waiver process created an unfair playing field for small businesses. House Republican Majority Leader Rep. Kerry Benninghoff, in a statement, took aim at Gov. Tom Wolf, saying his administration “added insult to injury by sowing confusion and angst among those seeking waivers by changing guidance and stacking the deck against mom-andpop businesses simply looking to continue operating safely.”
Guidelines changed more than once, and the directives came from Wolf’s office, DePasquale said during a news conference Tuesday. While the administration has been “cooperative,” the auditor general repeatedly expressed his frustration with the lack of explanation provided so far as to why the guidelines and specific waiver determinations changed.
DePasquale’s audit of the process is continuing, and he is calling on the Wolf administration to provide copies of emails and other communications it may have received from lobbyists and legislators regarding specific businesses.
“We believe strongly that there should be reasons given as to why answers changed,” he said. “The businesses are owed that, and if we are going to be in this situation again, we can’t have this Keystone Kops routine again.”
The waiver process came after Wolf on March 19 ordered businesses not categorized as life-sustaining to temporarily close to help stem the spread of COVID-19. Wolf, however, allowed businesses to request a waiver that would allow them to keep workplaces open if they were not deemed life-sustaining.
By the time the waiver submission period concluded April 3, the state received more than 42,000 waiver requests. Of those, more than 6,000 were approved, 12,826 were denied, 11,635 did not require an exemption and another 11,619 became subject to additional guidance as their industries — such as construction, golf courses and auto dealers — were allowed to reopen with restrictions.
Based on his office’s investigation so far, DePasquale said applicants who used particular buzzwords or key phrases such as “life-sustaining” in their waiver applications “dramatically increased” their chances of getting a waiver. This appears to have given an unfair advantage to business owners who reached out to legislators or lobbyists for help on the application, he said, and there’s evidence some businesses initially denied requests resubmitted waiver requests with the additional language.
“If it was truly a life-sustaining business, it’s appropriate they got [a waiver],” DePasquale said. “But it should have been based on whether the business was actually life-sustaining and not that they used the phrase, ‘life-sustaining.’ “
Smith said DCEDdid not make waiver decisions based upon predeterminations, pressure from Wolf’s office or any outside influences.
“The Wolf administration will continue to cooperate with the Department of the Auditor General, and DCED looks forward to reviewing and formally responding to the final report when it is issued, and is confident that any concerns expressed in this status update will be addressed appropriately,” Smith said.
The waiver process frustrated many business owners and employees, who found the state moved slowly and provided inconsistent answers. It also upset media organizations across the state, which used the state’s Right-to-Know Law to ask for a list of businesses that received or were denied waivers but were told such requests wouldn’t be addressed while the state’s physical offices were closed.
In the Lehigh Valley, more than 170 exemptions were granted in Lehigh County, while more than 110 were granted in Northampton County.
The two counties were mentioned briefly in DePasquale’s initial review, as it pertained to hair salons and garden centers.
The audit found there were 506 salons across 60 counties that submitted 529 waiver applications. While 497 salons were rejected, a salon in Lehigh County was one of four to receive approval because it was selling hand sanitizer or offering hair replacement services.
As it relates to garden centers, 236 applied for waivers, with 177 rejections. Forty-six garden centers, however, received a response indicating a waiver wasn’t required, a list that included two each in Lehigh and Northampton counties.
“We would need to follow-up with DCED to determine if they appear reasonable,” the review stated about the garden centers.
The initial findings stem from DePasquale’s announcement April 30 that he would audit how DCED managed the waiver process.
On May 8, DCED released basic information about the businesses that received exemptions to operate during the pandemic. The limited information, however, provided only the name of each company and the county in which it operated, rather than an explanation of howthat determination was made.
DCED has denied The Morning Call further information from waiver applications submitted by Lehigh and Northampton County businesses, including their justifications for a waiver, descriptions of their business operations, and even their number of employees. The department argues that such information is confidential and proprietary. An appeal before the state Office of Open Records is ongoing.