[Senate Hearing 114-325]
[From the U.S. Government Publishing Office]
S. Hrg. 114-325
EXAMINING AGENCY DISCRETION IN
SETTING AND ENFORCING REGULATORY FINES AND PENALTIES
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HEARING
before the
SUBCOMMITTEE ON
REGULATORY AFFAIRS AND FEDERAL MANAGEMENT
of the
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 11, 2016
__________
Available via http://www.fdsys.gov
Printed for the use of the Committee on Homeland Security
and Governmental Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
20-376 PDF WASHINGTON : 2016
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky JON TESTER, Montana
JAMES LANKFORD, Oklahoma TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire CORY A. BOOKER, New Jersey
JONI ERNST, Iowa GARY C. PETERS, Michigan
BEN SASSE, Nebraska
Keith B. Ashdown, Staff Director
Gabrielle A. Batkin, Minority Staff Director
John P. Kilvington, Minority Deputy Staff Director
Laura W. Kilbride, Chief Clerk
Benjamin C. Grazda, Hearing Clerk
SUBCOMMITTEE ON REGULATORY AFFAIRS AND FEDERAL MANAGEMENT
JAMES LANKFORD, Oklahoma, Chairman
JOHN MCCAIN, Arizona HEIDI HEITKAMP, North Dakota
ROB PORTMAN, Ohio JON TESTER, Montana
MICHAEL B. ENZI, Wyoming CORY A. BOOKER, New Jersey
JONI ERNST, Iowa GARY C. PETERS, Michigan
BEN SASSE, Nebraska
John Cuaderess, Staff Director
Eric Bursch, Minority Staff Director
Rachel Nitsche, Chief Clerk
C O N T E N T S
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Opening statement:
Page
Senator Lankford............................................. 1
Senator Heitkamp............................................. 2
Senator Peters............................................... 7
Senator Portman.............................................. 10
Senator Ernst................................................ 12
Prepared statement:
Senator Heitkamp............................................. 27
WITNESSES
Thursday, February 11, 2016
Jordan Barab, Deputy Assistant Secretary, Occupational Safety and
Health Administration, U.S. Department of Labor................ 4
Susan Shinkman, Director, Office of Civil Enforcement, Office of
Enforcement and Compliance Assurance, U.S. Environmental
Protection Agency.............................................. 6
Alphabetical List of Witnesses
Barab, Jordan:
Testimony.................................................... 4
Prepared statement........................................... 28
Shinkman, Susan:
Testimony.................................................... 6
Prepared statement........................................... 39
APPENDIX
Responses to post-hearing questions for the Record:
Mr. Barab.................................................... 45
Ms. Shinkman................................................. 54
EXAMINING AGENCY DISCRETION IN SETTING
AND ENFORCING REGULATORY FINES AND PENALTIES
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THURSDAY, FEBRUARY 11, 2016
U.S. Senate,
Subcommittee on Regulatory,
Affairs and Federal Management,
of the Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 9:33 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. James
Lankford, Chairman of the Subcommittee, presiding.
Present: Senators Lankford, Portman, Ernst, Heitkamp, and
Peters.
OPENING STATEMENT OF SENATOR LANKFORD
Senator Lankford. Good morning, everyone. I am glad that
everyone is here for this Subcommittee hearing.
The Subcommittee has held a series of hearings examining
the regulatory process. We determined over the course of these
hearings that a robust, efficient process will lead to better
regulations and better regulatory outcomes. We have not had a
lot of dissent on that. It is a matter of just working on the
process.
Today's hearing focuses on the proper role of regulatory
enforcement. It goes without saying that writing a law or
developing a regulation is easier than actually enforcing it
across the 50 States and our Territories in a fair,
predictable, and consistent manner. But doing so is essential.
Fair, predictable, consistent regulatory enforcement procedures
must be understandable for all stakeholders.
I believe that most Federal agencies agree that
transparency is important and that providing accessible
compliance assistance services is essential to any
comprehensive enforcement regime. Safety, fairness, fighting
discrimination are all great goals of our regulators and of
enforcement. I think that is a reasonable thing.
But, as we have learned from previous hearings, the sheer
magnitude of the Code of Federal Regulations (CFR) means that
understanding and complying with regulations is a gargantuan
task for most individuals and businesses. The complexity of the
regulatory system, coupled with the fear that failure to
comply, even if complying is completely accidental, will result
in a fine or penalty, that means that a business will feel they
are targeted for arbitrary violations that they do not fully
understand.
As a result, regulated parties often feel confused. They
deal with conflicting compliance information and it leaves them
vulnerable to the whims of any regulator. In fact, one small
business owner from one of the States mentioned back to us that
when faced with the overwhelming number of regulatory
requirements, ``what chance does a business have? ''
Indeed, many individuals and businesses believe that agency
officials enforce regulations in an unfair, unpredictable, and
arbitrary manner. Because businesses often feel they are
targeted arbitrarily, they are understandably fearful at times
of Federal regulators.
I hear stories from businesses that their only interaction
with agency enforcement issues is to inspect and issue fines.
As a result, my constituents tell me that their relationship
with agencies have deteriorated and that instead of inspectors
working with businesses to identify and solve compliance
problems, government regulators show up, issue a fine and
punishment.
When businesses choose to avoid interaction with Federal
agencies and dread inspections, our shared regulatory goals are
not achieved and we have a breakdown between the government
that is designed to serve people and the people that they
serve.
Agencies should play an active role in changing this
culture. Agency officials, starting at the top, can set the
tone by emphasizing compliance assistance, prevention through
education, so that finable offenses, not to mention larger
tragedies, do not occur in the first place. If businesses are
no longer apprehensive in approaching an agency when they need
clarification, they will likely find regulatory compliance
easier and it will be more successful in compliance goals. In
turn, all of us will enjoy safer workplaces and a cleaner
environment.
I look forward today to discussing our shared goals and
feasible solutions. It is my hope we can start setting a tone
in all of our agencies that helps engage with people and helps
the people that are designed to serve the Nation and the people
that we serve to actually have a better relationship in the
days ahead.
With that, I would recognize Ranking Member Senator
Heitkamp for her opening remarks.
OPENING STATEMENT OF SENATOR HEITKAMP
Senator Heitkamp. Thank you, Chairman Lankford, for holding
this hearing today and, giving us all an opportunity to explore
this topic in our regulatory process.
I am interested in hearing from our witnesses today as we
examine how regulatory enforcement is working on the ground to
improve compliance as we identify ways in which Congress and
the administration can work together to improve compliance with
our regulations.
For our Nation to be successful and safe, for our citizens
to be able to work hard and provide for their families, we need
a regulatory process that works for American business and
American families. That means we need to have enforcement
mechanisms to ensure everyone is playing by the same set of
rules.
To that end, fines, penalties, restitution orders, and
other sanctions are critical tools that the government has at
its disposal to achieve compliance and deter wrongdoers from
violating Federal laws and regulations. Without such tools,
agencies have very little leverage in which to ensure the
safety and health of our citizens and our environment.
However, on the other side of the same coin, I believe that
ensuring regulated agencies and entities have the necessary
resources and information to successfully comply with
regulations should also be our top priority. In fact, we have
these mechanisms to ensure compliance and no one should feel
like they are living in a ``gotcha'' world, where they are
unaware of what the requirements are and only fearful that the
sheriff will show up and slap a big fine on when they did not
even know that they had an obligation to comply with a
regulation.
So, therefore, I am also interested in learning how your
agencies focus their energy and resources on compliance
assistance programs and ensure that entities are aware of what
those requirements are. Specifically, I would like to know how
both of your agencies work with small business to ensure that
regulatory requirements are clear, transparent, and accessible.
I know that both of your agencies work very closely with the
Small Business Administration (SBA) and their office to ensure
that small business concerns are appropriately addressed and
quickly addressed.
So, I look forward to hearing from both of you and hearing
your insights as part of this all-important job that we have to
do, which is to keep our citizens safe.
Senator Lankford. At this time, we will proceed with
testimony from our witnesses.
Jordan Barab is the current Deputy Assistant Secretary of
Labor at Occupational Safety and Health Administration (OSHA),
a post he has held since April 2009. Prior to his current
position, Mr. Barab served as Special Assistant to the
Assistant Secretary of Labor for OSHA. Mr. Barab has also
worked with the U.S. Chemical Safety and Hazard Investigation
Board and for the House Education and Labor Committee. Thank
you for being here, Mr. Barab.
Susan Shinkman is the Director of the Office of Civil
Enforcement (OCE) at the Environmental Protection Agency (EPA),
a post that she has held since August 2012. Prior to this post,
she served as the Chief Counsel to the Pennsylvania Department
of Environmental Protection. She also served as Chief Counsel
to Pennsylvania's Inspector General (IG) and the Pennsylvania
Department of Labor and Industry. Ms. Shinkman also served as
Assistant United States Attorney in the U.S. Attorney's Office
for the Eastern District of Pennsylvania.
I would like to thank you both for appearing here as
witnesses. It is the tradition and custom of this Subcommittee
to swear in all witnesses, so if you would please stand and
raise your right hand.
Do you swear that the testimony you will give before this
Subcommittee will be the truth, the whole truth, and nothing
but the truth, so help you, God?
Mr. Barab. I do.
Ms. Shinkman. I do.
Senator Lankford. Thank you. You may be seated. Let the
record reflect the witnesses have answered in the affirmative.
We will use a timing system. You will see a countdown clock
in front of you. We are not strict on time except that we have
10:30 votes that are being called today, and so be very
attentive to time to make sure that we get plenty of time for
your testimony as well as the questions of those that are here
at the dais today. Your written testimony will already be a
part of the permanent record, so anything in your oral
testimony that you would like to share beyond your written
testimony is acceptable, whatever may be.
Mr. Barab, typically, we go ladies first, but today, we are
making an exception to be able to have you go first, if you are
OK with that, and have you be able to kick off today. So, we
will receive your testimony now.
TESTIMONY OF JORDAN BARAB,\1\ DEPUTY ASSISTANT SECRETARY,
OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION, U.S. DEPARTMENT
OF LABOR
Mr. Barab. Thank you very much. Good morning, Chairman
Lankford, Ranking Member Heitkamp, and distinguished Members of
the Subcommittee. Thank you for inviting me here today.
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\1\ The prepared statement of Mr. Barab appears in the Appendix on
page 28.
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As Deputy Assistant Secretary of Labor for the Occupational
Safety and Health Administration, I am honored to testify about
the important work we are doing. As you know, OSHA's mission is
to ensure the safety and health of roughly 130 million workers.
Over the last 45 years since OSHA was created, we have made
dramatic progress in reducing work-related deaths and injuries,
but there is still a great deal more to do.
I would like to begin today by briefly discussing OSHA's
investigation and citation process. OSHA recognizes that most
employers want to keep their employees safe, but there are
still far too many employers who cut corners and fail to
protect their employees. For these employers, avoiding OSHA
penalties remains an effective incentive.
Under the OSH Act, the Department is authorized to conduct
inspections and issue penalties for health and safety hazards.
The OSH Act also sets forth the types and amounts of potential
penalties. For instance, OSHA penalties for willful or repeat
violations have a maximum of $70,000 for each violation.
Penalties for serious violations have a maximum of $7,000 per
violation. Until recently, these figures have remained static.
However, the 2015 bipartisan budget bill passed by Congress
raised penalties and provided an opportunity for penalties to
be indexed to inflation for the first time.
The primary purpose of the penalties is deterrence. Any
funds collected are deposited in the U.S. Treasury and are not
used to support agency functions.
OSHA carefully considers the impact of our penalties on
small businesses. We take into account several factors. OSHA
generally reduces penalties for small employers as well as
those acting in good faith and employers with no recent
citations. In fact, the average OSHA penalty for a serious
violation is roughly $2,000. Sadly, these penalties can often
seem too low. This is particularly true for incidents involving
worker fatalities, where the penalty is often only a few
thousand dollars.
Workplace inspections and investigations are conducted by
OSHA compliance officers. They are trained safety and health
professionals who are given strict procedures that they must
follow. OSHA conducts two general types of inspections,
programmed and unprogrammed. Programmed inspections account for
roughly 46 percent of inspections and specifically target the
most dangerous workplaces and the most recalcitrant employers.
Unprogrammed inspections account for 54 percent of inspections.
They are initiated for several reasons, including worker
complaints, referrals, employer reports, and followup
inspections.
OSHA's primary goal is correcting hazards, not issuing
citations or collecting penalties. As a result, when OSHA
issues a citation, we always offer the employer an informal
conference with the area director. The agency and the employer
may work out a settlement agreement. Last year, 65 percent of
inspections with a citation resulted in informal settlements.
Alternatively, employers can formally contest the alleged
violations and/or penalties. Last year, this happened in 7.4
percent of cases. These contests were sent to the Occupational
Safety and Health Review Commission for independent review.
At the same time, we recognize that most employers want to
do the right thing and we are committed to ensuring that they
have the tools and information they need. This is why we have
made compliance assistance a priority. We work diligently to
provide training, educational materials, and consultation
services to employers and workers. New OSHA standards and
enforcement initiatives are always accompanied by webpages,
fact sheets, guidance documents, webinars, interactive training
programs, and special products for small businesses.
The cornerstone of this effort is our onsite consultation
program for small and medium-sized businesses. Last year, close
to 30,000 employers took advantage of this free, high-quality
service. A full 87 percent of these visits were to businesses
with fewer than 100 employees.
OSHA also continues its strong support for recognizing
employers who make safety and health a priority. Through the
Safety and Health Achievement Recognition Program (SHARP) and
the Voluntary Protection Program (VPP), we recognize employers
who have developed outstanding injury and illness prevention
programs. SHARP and VPP employers demonstrate that safety pays.
They serve as models for other businesses to follow.
Another critical piece of our strategy effort is the Susan
Harwood Training Grant Program. This program provides funding
to nonprofit organizations for valuable training and technical
assistance for vulnerable workers and workers in small
businesses.
OSHA also provides additional cooperative programs designed
to encourage, assist, and recognize efforts to eliminate
hazards and enhance workplace safety and health practices. For
example, OSHA has an alliance with the National Service
Transmission, Exploration, and Production Safety (STEPS)
Network, along with the National Institute for Occupational
Safety and Health (NIOSH), to help employers reduce injuries
and fatalities in the oil and gas industry.
Thank you again for the opportunity to testify about the
work we are doing every day to improve the safety and health of
American workers and how we put great effort into making sure
employers have all the necessary tools they need to meet their
responsibilities.
I would be pleased to answer any questions you may have.
Senator Lankford. Thank you. Ms. Shinkman.
TESTIMONY OF SUSAN SHINKMAN,\1\ DIRECTOR, OFFICE OF CIVIL
ENFORCEMENT, OFFICE OF ENFORCEMENT AND COMPLIANCE ASSURANCE,
U.S. ENVIRONMENTAL PROTECTION AGENCY
Ms. Shinkman. Thank you, Mr. Chairman, Ranking Member
Heitkamp, and Members of the Subcommittee. I am Susan Shinkman.
I am the Director of the Office of Civil Enforcement, an office
within EPA's Office of Enforcement and Compliance Assurance. We
are responsible for developing and prosecuting civil,
administrative, and judicial cases and providing legal support
for cases and investigations initiated by EPA regional offices.
Thank you for the opportunity to testify about how EPA meets
the challenge of ensuring consistent implementation and
enforcement of Federal environmental laws and regulations.
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\1\ The prepared statement of Ms. Shinkman appears in the Appendix
on page 39.
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Our mission is to protect both human health and the
environment by ensuring compliance with environmental laws. EPA
regions support the national programs while working to ensure
that EPA's work complements State, Tribal, and local
environmental priorities.
To provide consistency across the regions and headquarters,
the civil enforcement and compliance programs employ statute-
specific policies to address compliance monitoring, enforcement
responses to violations, and penalty assessments.
EPA recognizes the role of small businesses in the Nation's
economy and has developed innovative compliance assistance
tools to help the small business community understand and
comply with environmental requirements. When a new rule
implemented--impacting small entities EPA prepares Small Entity
Compliance Guides, which explain the actions that a small
entity must take to comply. When EPA conducts an inspection of
a small business, we hand out information related to the rights
of the small business. Under our small business compliance
policy, EPA will eliminate or significantly reduce penalties
for small businesses that discover violations and promptly
disclose and correct them.
In recognition of these efforts, the Small Business
Administration has given EPA's enforcement and compliance
program as it affects small businesses an A rating for every
year since 2005.
One of the ways that EPA's regional offices, together with
their State, local, and Tribal partners, monitor compliance is
through inspections of facilities. Inspectors record
observations and identify areas of concern, and at the
conclusion of the inspection, they will discuss their
observations with the regulated entity. If followup is needed,
EPA will work with the regulated entity to remedy the
violations.
The vast majority of our enforcement cases are resolved
through a settlement. Approximately 90 percent are handled
administratively, while larger, more complex matters are
usually handled as civil judicial cases in conjunction with the
Department of Justice (DOJ).
In addition to injunctive relief to ensure compliance, EPA
does seek penalties to achieve deterrence and remove any
significant economic benefit resulting from noncompliance. This
levels the playing field by preventing companies that break the
law from having an unfair competitive advantage. EPA's penalty
policies also provide for a reduction in penalty based on
ability to pay.
EPA has made tremendous progress toward achieving cleaner
air, water, and land over the last four decades. We will
continue to work with States, Tribes, and local governments to
make smart choices about priorities, to take advantage of
innovations, and to ensure that the most important work is done
first.
EPA's enforcement program is designed to produce consistent
and fair results that achieve compliance, cure noncompliance,
deter future violations, and benefit human health and the
environment.
Thank you for the opportunity to testify and I would be
happy to answer any questions.
Senator Lankford. Thank you. Thank you both.
The Chairman and Ranking Member are going to defer our
questions toward the end and I would recognize Senator Peters
for the first question.
OPENING STATEMENT OF SENATOR PETERS
Senator Peters. Thank you, Mr. Chairman, and thank you for
deferring. I do need to leave to speak on the floor, so I
appreciate this opportunity. I will be on the floor talking
about the situation we have in Flint, Michigan, and appreciate
the opportunity to ask a question of Ms. Shinkman.
Ms. Shinkman, on December 8, 2009, the EPA sent a
memorandum to its regional administrators titled, ``Proposed
Revisions to Enforcement Response Policy for the Public Water
System Supervision Program.'' In this document, which is
attributed to an Assistant Administrator in your office at the
time, Cynthia Giles, the memo outlines a risk-based approach
for enforcement of the Safe Drinking Water Act to target repeat
violators by assigning points based on the number and severity
of violations. Page six of this document outlines EPA's
enforcement response policy model for repeat violators. This
policy states, and I quote, ``Responses to violations should
escalate in formality as the violation continues or occurs.''
Additionally, I understand that in those States with
primacy over enforcement, EPA is authorized after 30 days under
the Safe Drinking Water Act to take certain actions to return a
system to compliance. These authorities allow the EPA to issue
administrative orders, impose fines, and pursue other civil and
even criminal actions. The same EPA policy document explains
that most enforcement actions are administrative in nature,
but, I quote, ``judicial cases are also an important
enforcement tool and the use of judicial authority is
encouraged.''
So, understanding your agency's wide discretion in
decisions of whether to levy fines against violators of our
Nation's environmental laws, in the case of the Safe Drinking
Water Act, we have a document here that encourages the EPA to
seek judicial remedies when formal enforcement actions are
necessary, whether in the form of injunctive relief, civil
penalties, or criminal action.
With this in mind, I want to direct your attention, as I
mentioned, to my home State, in the city of Flint, where we, as
you know, have a very difficult situation, where there have
been a series of bad decisions that now have subjected the
entire city to toxic lead-tainted water. Nearly 2 years ago, an
unelected emergency manager that was appointed by Governor
Snyder changed Flint's water source to the Flint River in order
to save some money, and we know the result of that State
decision has been catastrophic.
The water crisis in Flint is an immense failure of Michigan
State Government, certainly. The Michigan Department of
Environmental Quality (MDEQ) has admitted they failed to
properly follow the Federal lead and copper rule and that they
chose not to ensure optimal corrosion control treatment was in
place going forward.
Your agency's own emergency order invoked under authorities
of the Safe Drinking Water Act on January 21 of this year
states in its findings of fact, and I quote, ``The presence of
lead in the city water supply is principally due to the lack of
corrosion control treatment after the water source was switched
and the city of Flint MDEQ and the State have failed to take
adequate measures to protect public health.'' The emergency
order also reserves EPA's right to commence civil action and
assess civil penalties in order to ensure compliance with this
order.
However, the same document explains that EPA Region 5 staff
first expressed concern about the lack of corrosion control
back in May. That means the emergency order was issued at a
minimum of 7 months after the EPA's concerns were first
communicated to the State.
So, if I am reading this law right, the EPA only has to
wait 30 days before it can pursue enforcement actions on its
own separate from the State, and at the very least, the EPA
needs to have some authority to tell the public directly about
this health crisis. That is why I have introduced legislation
to require the EPA to notify the public after 15 days if a
State has not done so. The House passed similar legislation
just yesterday.
So, my question to you is fairly simple. If your agency's
own policy document encourages judicial action when a situation
is escalating, why did the EPA wait so long to take action in
Flint?
Ms. Shinkman. Senator, I appreciate your question and
certainly your concerns. This is a very tragic and catastrophic
issue. The authority under the Safe Drinking Water Act is to
give primacy to the States to try and do their enforcement and
make sure that the Safe Drinking Water Act is properly
administered. In this case, clearly, there was a falling down
on the appropriate measures. The EPA Regional Office, Region 5,
was monitoring what was going on with the State over a period
of time. Obviously, a significant amount of time passed in
which perhaps other action should have been taken.
My office became aware of it in the fall of last year. We
worked with the region. We were monitoring what was going on.
And, at the time we became aware of it, there were steps that
were being taken. We monitored them as well as we could. When
we realized that the situation required emergency action, we
took the action on January 21 and issued that order.
The order is very specific. It is issued to the State, the
MDEQ, and the city of Flint. It has very specific requirements
over a short period of time. We are monitoring that order on a
daily, almost hourly, basis to make sure that we try to bring
the city back into compliance and improve the drinking water in
the city of Flint.
We have taken that action. The most immediate need was to
do emergency action. If that does not work, we will obviously
be following through with other enforcement actions,
potentially judicial.
Senator Peters. Well, and I know my time has expired, but I
realize that you have taken action and have been much more
focused on the Flint situation now, which I appreciate. But,
why did that not happen months ago? As you know, every month
that goes by with tainted water and children, in particular,
who are consuming water with lead that creates irreparable
damage to their brains, why was this not treated as a crisis
immediately?
Ms. Shinkman. I cannot answer for everyone who was involved
in it. I can say from my office, as we became more aware of it,
we moved and we took the most appropriate action we could in
January. Other people's actions earlier, I cannot account for
all of them. I recognize the fact that it is a very important
issue. It is certainly being looked into by a lot of people.
Senator Peters. So, what do we need to do going forward?
How can we prevent this from ever happening again? What sort of
actions do we need to take, or is there anything that we need
to be doing working with you at the EPA?
Ms. Shinkman. From the EPA's standpoint, we are very aware
of what happened. We are going to try and make sure it does not
happen again. We are looking back at what happened here, and
looking forward, we are scouring to make sure that something
like that does not ever happen again. The authority is there.
The emergency existed. We issued the emergency order. In a
similar case, we would certainly issue a similar emergency
order as soon as we could.
Senator Peters. Well, and I understand that there was some
confusion within the EPA as to whether or not they should go
public or whether or not you should go public with some of the
tests that were coming forward, that is why I have introduced
legislation with Senator Stabenow to require immediate public
disclosure if a State does not take action, if a State is not
making these tests available to the public that show elevated
levels of lead or other toxins. I believe the House bill has
even a quicker timeline of 24 hours that you have to report.
Our bill has 15 days.
But, we need to be very clear that if the EPA sees
something, that you go public. There should be no ambiguity
about that. It should be clear cut, straightforward, that the
public has a right to know. Certainly, the State of Michigan
bears primary responsibility for this crisis. There is no
question about that. They need to step up. They broke it. They
need to fix it. But, certainly, I am extremely disappointed
with the EPA's response on this, as are so many people, and I
think we can never tolerate the EPA not going public
immediately when you have a building crisis of this magnitude.
So, I will continue to work with you and your office and I
look forward to working closely so that we can do whatever it
takes to make sure that this never, ever happens again.
Thank you.
Senator Lankford. Senator Portman.
OPENING STATEMENT OF SENATOR PORTMAN
Senator Portman. Thank you, Mr. Chairman, and let me just
start by saying, with regard to Senator Peter's comments on
water quality, we are working with the EPA on some issues in my
State of Ohio. I do not know if you know Bob Kaplan, your
Assistant Administrator, but I have spoken to him directly
about some of these same issues. In our case, it is a small
community called Sebring, Ohio, and the mayor, Mayor Pinkerton,
and I have talked on occasion about, over the last 2 or 3
weeks, about EPA's role. We want to be sure EPA is providing
the technical expertise and providing the kind of oversight
that they are required to, but also providing transparency.
So, I would ask you today, Ms. Shinkman, because you are
here and because this topic is timely, if you could please
ensure that, in fact, we are not having another case where the
EPA is not providing the right kind of information to the
people who are depending on the water supply. We think things
are under control in Sebring right now, but in my conversations
with Mr. Kaplan, I made it clear that we expect EPA to do its
job and to provide the transparency to the people of that
community.
Ms. Shinkman. I appreciate that, Senator. I am aware of the
situation. I believe EPA is directly involved at this point and
will continue to monitor it.
Senator Portman. And, I want to thank the Chairman and
Ranking Member for holding this hearing. We once again are
seeing this Subcommittee do good work, and this is a
Subcommittee to look at regulations and, therefore, the
regulatory process including regulatory fines and penalties.
They roll up their sleeves and jump into this, the Chairman and
Ranking Member, and I really appreciate that, because I think
there is increasing power in the regulatory system that has not
had the proper oversight and this is one area.
If you are a small business person, it is intimidating. You
do not have the compliance people to figure out what all these
potential regulatory issues are, much less what the fines and
penalties might be, and if there is not a consistency in terms
of the application and transparency in terms of what the rules
are, it makes it very difficult, one, to comply, and two,
again, just intimidation of not being able to figure out what
the rules are.
Mr. Barab, I did not get to hear your whole testimony, but
I got to read some of it just now, and I appreciate your being
here today and talking about what OSHA is doing to try to make
it easier for people to understand, particularly small
businesses, what the rules are. You have a thousand inspectors
out there, is that right? I saw that in your testimony.
Mr. Barab. Yes, a thousand in the Federal level and
probably another 1,100----
Senator Portman. At the State level?
Mr. Barab [continuing]. Among the 28 State plans.
Senator Portman. Yes. So, you have 2,100 people, at least,
but a thousand at the Federal level. That is a lot of people,
and if you have the kind of flexibility I saw in your testimony
and you have different applications depending on the situation,
how do you have consistency, and what are you doing to ensure
that there is a consistent application across the agency,
understanding that flexibility is something you also want,
because in some instances, that flexibility can be very helpful
to a small business, to work more as a partner with them to
resolve issues rather than an enforcement measure to punish
them for something that they did not have the expertise to
handle. So, talk about that.
Mr. Barab. Yes. Thanks for the question. It is a good
question, because that is one of our major challenges always,
ensuring consistency among our inspectors around the country.
We do train our inspectors very carefully when they first
come on and continuously thereafter to ensure that they are
complying with the procedures. We have what is known as our
Field Operations Manual, which is a notebook about this size
which contains all the procedures, all the enforcement
procedures, the penalty procedures, the appeal procedures,
everything that an inspector needs to make sure that they are
doing their job, again, with that consistency, with the
transparency that we value.
We monitor that. I mean, we have a whole staff in
Washington making sure that our inspectors do follow those
procedures. We work very closely with our solicitors, again,
when we run into difficult problems, again, to ensure that kind
of consistency.
Now, we also do, as you mentioned, have some flexibility
there, and I think that is a good thing, because we are dealing
with many employers who have a right to, and we listen to their
defenses when that happens. We have a process where we have
informal conferences after we issue the citations in order to
discuss the problems that we found and to talk about possibly
reducing fines or changing the citations. So, I think we do try
to balance those procedures with some flexibility.
Senator Portman. Thank you. I appreciate that. And, again,
your testimony was helpful in that regard and this Subcommittee
is going to be looking at ways to increase that transparency
and to let people know what the issues are that they have to
address, but also, how the fines and penalties work.
And, Ms. Shinkman, my time has now expired, but I assume
that you are going to answer this further, how the EPA could
increase the transparency in terms of letting people know what
is going on. I am going to turn it back to the Chairman and
Ranking Member, but I look forward to hearing what your
response is to that.
Senator Lankford. Ms. Shinkman, if you want to go ahead and
answer that, you are certainly welcome to.
Ms. Shinkman. Thank you. Yes, we are very concerned about
those issues, as well--consistency, transparency, and
flexibility in all of our penalty policies and our regulatory
actions. For transparency, we have all of our policies on the
web. They are available for anyone and you can see them by
statute or by program area. Any of our proposed settlement
agreements are open for public comment.
For consistency, we have actually a specific policy for
each statute that are applicable across all ten regions and
headquarters so we all have the same standards to apply. We
have training for our inspectors that is also done across the
ten regions and with headquarters.
We are also very concerned about flexibility, because we
face big industries and small businesses, and so we have built
into all of our policies many standards that we can look to to
make sure that we are applying them flexibly. For example, we
look at the compliance history of the entity. We certainly look
at the size of the entity. That is a big issue for us because
of the disparities that we see. We look at the good faith
efforts to comply as opposed to willfulness of noncompliance.
We look at the duration of any violation. And we also look at
the seriousness of it.
And, finally, in any penalty situation, we look at the
ability of the violator to pay so that we can be addressing
that realistically before we settle on any final penalty.
Senator Portman. Thank you, Mr. Chairman.
Senator Portman. Senator Ernst.
OPENING STATEMENT OF SENATOR ERNST
Senator Ernst. Thank you, Mr. Chairman, and thank you both
for your testimony today.
Ms. Shinkman, we do not have to look any further than a lot
of headlines out there today to see that the American public
does not have a lot of faith nor trust in our government and
government officials. That is quite evident with what we see
going on in the primaries, the caucuses, and, of course, what
we see with a number of agencies across the Federal Government.
Could you please tell me the last time that Administrator
McCarthy reviewed the procedures of the onsite inspectors.
Ms. Shinkman. I am sorry, I cannot answer that. I will be
happy to get back to you and look into that.
Senator Ernst. If you would, please.
Ms. Shinkman. Sure.
Senator Ernst. And, do you know, has she ever participated
in an inspection from start to finish to better understand what
our small businesses must do to comply with their inspections?
Ms. Shinkman. I will certainly look into that.
Senator Ernst. OK. And, my point of this is that there are
a lot of bureaucrats out there that will simply throw out rules
and regulations without understanding the full impact from
start to finish, both the labor intensity in any of these rules
and regulations or the cost to the businesses. I think it is
disregarded so many times.
So, I would like to see leaders leading from the front and
understanding what they are instructing our civilian
population, our companies, our small businesses, to comply
with. It is easy to sit in an office and push out rules and
regulations, but we need leaders that are willing to go on the
ground and actually walk through these situations with those
business owners so they get it. Our American public feels that
our bureaucrats do not get it. They have lost touch with what
is going on out in the communities.
As you know, EPA's Waters Rule is very concerning to many
in my State, as well as many others out there, and I want to
take a minute to get some clarity on the interim Clean Water
Act settlement penalty policy, and I am going to quote here. It
says that, ``it sets forth how the agency generally expects to
exercise its enforcement discretion in deciding on an
appropriate enforcement response and determining an appropriate
settlement penalty.''
And then I am going to walk you through the formula on how
to calculate a penalty. Again, ``The settlement penalty is
calculated based on this formula. Penalty equals economic
benefit plus gravity, plus or minus gravity adjustment factors,
minus litigation considerations, minus ability to pay, minus
supplemental environmental projects.''
My concern that I hope that you can address is that it
seems you all have a tremendous amount of discretion when it
comes to enforcing a penalty, that is No. 1. And, to be honest,
I have never seen a formula with so many variables here. And
not only do we have so many variables, it is EPA that decides
what the gravity is, what the economic benefit is, what that
litigation consideration is, and you also decide what the
business's ability to pay is.
This is very confusing, and how is this approach assisting
business owners into compliance? It seems like we have the EPA
against our businesses, and can you explain this policy.
Ms. Shinkman. Thank you, Senator. I will attempt?
Senator Ernst. Very frustrating.
Ms. Shinkman. Well, I appreciate that, and those of us who
work with it every day perhaps get a little more familiar with
it and perhaps lose sight of how it might look to someone for
the first time or the second time. So, maybe we need to look at
our language a little bit better. But, I can explain a couple
of those elements to you----
Senator Ernst. Please.
Ms. Shinkman [continuing]. In a way that I hope will be
helpful.
Starting from the back, the ability to pay, the only way
EPA determines or makes any finding about ability to pay is
based on what the violator submits. If we have a penalty amount
that seems to be appropriate, and I will get to how that is
derived in a minute, but if the entity says that they do not
think they can pay, we ask them to explain that and give us
some information about why, and we look into realistically
whether that is true, based on tax returns or other economic
financial statements that a business might provide.
So, the EPA does not pick out from the air what the ability
to pay is. We work with the information that is provided by the
entity, and we give that opportunity to provide statements
about pay, and very often it leads to a reduction in the
penalty. So, that is how that determination is made toward the
end.
The economic benefit is a way of finding out whether a
company that, if not in compliance, benefited by not having to,
say, pay for controls that all of their competitors had to pay
for. If there is some kind of equipment that costs maybe
$10,000 a year to operate and the entity that was in
noncompliance did not install it but all of their competitors
did, they received an economic benefit of $10,000 every year
that they operated without that control. So, that would be an
economic benefit that would be part of the penalty calculation.
Senator Ernst. But, all of this is decided by the EPA,
correct?
Ms. Shinkman. In discussions with the company. We would not
have the information without talking to the company. But, we
would ask, if we saw that they did not have the control, we
would talk perhaps to the competitors, perhaps we would know
what that control cost, and if it was not there, it is an
iterative process, coming up with a penalty. Those are two
elements that are distinct that you mentioned. That is how the
ability to pay works. That is how the economic benefit works.
And then the other considerations that some, I think, were
listed as part of what we call the gravity component, that is
where the willfulness as opposed to the unknowingness comes in,
and the length of the violation--if it was a spill, whether it
went on for a month or a day, what the harm was from it. Those
are the kinds of considerations that come in, and sometimes in
a matrix way that we work with the company on to try to
determine what the appropriate penalty is.
And, we resolve most of our cases through settlements by
having this discussion. And, rather than just having a free-
wheeling, what do you think is appropriate, we set out these
guidelines. The economic benefit is one and then the gravity
component is built--consists of these other considerations,
like damage, length of time, the prior history of the violator.
Senator Ernst. OK. And, I know I am going way over. I am
going to make one final point, because we have cases like
Senator Peters was just discussing with the Flint water
situation, where the EPA did know something. We do not know the
full extent of this, but the EPA knew. We have a mine spill
that affected a river. Who decides if the EPA is at fault and
how much they should be fined for incidents like this?
And, I know you cannot answer that. That is just one of
those questions out there that, it seems like the EPA has got
so much power and control over so many situations. You try and
gain more control through expanded definition of Waters of the
United States, but you cannot honestly manage what you already
have under your belt.
So, I am going to stop right there, but I appreciate the
extra time. Thank you very much.
Senator Lankford. Senator Heitkamp.
Senator Heitkamp. Thank you, Mr. Chairman.
As someone who once upon a time, when I was tax
commissioner, had to write a penalty policy, I sympathize,
because frequently, if you just leave it up to discretion
without any kind of policy, what you get is the squeaky wheel
gets the grease and everybody else who is in exactly the same
situation is not treated fairly, if they say, well, I did it,
so I am going to pay the penalty. We need to make sure that
that does not happen, and so I would just suggest to you that
people can be bitter if they find out, boy, I did not get my
penalty waived or reduced, but he did simply because he asked.
And, so, I just set that out as one of the concerns.
But, my main reason for wanting to have this hearing and
for how I look at this is penalties should be last resort. That
should be the very end of enforcement. That should be the end
of regulation. That should be reserved for those people who do
not get it, who have done something that is, in my opinion,
fairly blatant, knowing that they have not been in compliance
with the regulation.
I was intrigued by the stakeholder discussions, because I
think compliance is why we have penalties, and you should all
want, as agency heads, to walk in and never assess a penalty.
It means that you are doing your work on the front end in terms
of compliance.
And, so, I was interested in the work that OSHA does with
stakeholders that you discussed in your testimony. Can you
elaborate how you reach out to safety organizations and how you
collaborate with manufacturers and stakeholder groups.
Mr. Barab. Yes. We have a number of means of doing that.
First of all, we have a fairly large part of our budget that
goes to compliance assistance. I think it is this year about
$68 million.
Senator Heitkamp. What percentage is that?
Mr. Barab. Well, it is a little over 10 percent, probably
12 percent----
Senator Heitkamp. You may want to up that a little bit.
Mr. Barab. Well, it has actually been cut back since--that
is one of our budget items that has never really recovered from
sequestration, which is rather upsetting, because what that
money does largely is go to paying for what we call compliance
assistance specialists, which we at one time had one in each
one of our 85 area offices. Now, we are not able to quite
afford that anymore. And, what these compliance assistance
specialists do is they work with businesses to make sure that
they are aware of their obligations under the law, that they
are aware of best practices, that they are aware of basically
how to keep their workplaces safe.
Senator Heitkamp. North Dakota has a workforce safety
program that is State run, and I think it might be one of the--
it used to be everybody had State-run systems and now we have
transitioned. Can you talk about how you work with the State-
based systems? Could you not expand your outreach in terms of
workforce safety by working with the insurance agencies?
Mr. Barab. Yes, and we do try to work with everyone, not
only with private sector stakeholders, but with the States.
Now, North Dakota is not one of the States that has its own
health and safety program, so we are directly responsible for
enforcement of health and safety, workplace health and safety.
Senator Heitkamp. And you have two inspectors in North
Dakota.
Mr. Barab. Yes. We are trying to up that.
Senator Heitkamp. Yes.
Mr. Barab. We know there is a major problem there. We are
actually opening an office--and right now, we actually have an
office that covers South Dakota and North Dakota. We are
opening up a new office in South Dakota so that we can put more
resources into North Dakota, because we realize, given the oil
boom there, there is a major demand, and, the incidents and
injuries and illnesses and fatalities that have come along with
that. So, we do try to work very carefully with the States
where they have those resources, again, as well as with the
private sector in all States.
Senator Heitkamp. When I served on the board of directors
of a large chemical--that is what is was--gasification plant, I
mean, we had a safety report before we did anything else, and I
think the industry is very interested in workforce safety. It
is expensive not to be focused on workforce safety. And, a lot
of the programs like the ones that are run by the State of
North Dakota encourage compliance and, so, I am trying to
basically say, let us not get out there with a ``gotcha.'' Let
us get out there and invest a lot of resources in meeting kind
of compliance on the front end.
The other thing that will be a bonus as a result of that is
you will begin to understand how some of your regulations are
perceived and that they do not add value to safety and the
workforce. Those are regulations that have been written in
Washington, D.C., that, as Senator Ernst talked about, when
they are applied, do not necessarily achieve a result that in
any way adds value to workforce safety.
And, so, I just really think 10 percent of the compliance
budget, or enforcement budget, going to educating and getting
people into compliance is an inadequate balance.
I am kind of running out of time, but I would like to know
what that split is at EPA.
Ms. Shinkman. I do not know offhand what it is. We could
certainly get that information for you. We do have compliance
programs, particularly for small businesses and for
agriculture----
Senator Heitkamp. Why do you think everybody is so afraid
of EPA? No, I mean, I think, you sit here, and I think
sometimes EPA feels under siege, but we hear it when we are
there. We hear the concerns. We hear the fear. That is not
exaggerated and it is not an over-focus of ours. So, what is it
about your agency that strikes the fear in the heart of the
people you regulate?
Ms. Shinkman. I do not think I can answer that directly. I
appreciate----
Senator Heitkamp. I am just making my point. You do not
need to try and answer that question. But, I think it is a
legitimate point and I think it should cause some soul
searching within your agency on why that is and how you can do
a better job working with those people.
You can only look at what happened in Flint and realize how
critically important it is, what you do. I mean, and that you
do what you do well. Flint is a reminder to all of us that we
need these agencies. But the question becomes, how do we
prevent this from happening, as Senator Peters talked about,
but also, how do we develop a better relationship long-term.
Mr. Barab. Senator, if I could correct one thing I said, I
mentioned our $68 million for compliance assistance.
Senator Heitkamp. Yes.
Mr. Barab. That is our Federal compliance assistance budget
for the services that I mentioned. We also have what I
mentioned in my testimony----
Senator Heitkamp. Right, the State----
Mr. Barab [continuing]. Which is our consultation budget,
which goes totally to small employers, and that is about $50--I
think it was $57 million, so that is added to the $68 million
that I mentioned before.
Senator Heitkamp. I will followup with some questions.
Mr. Barab. OK.
Senator Heitkamp. And, I am interested in what your plans
are for the Dakotas, so----
Mr. Barab. Sure.
Senator Lankford. Let me just give you a couple quotes. As
we asked the question, and we let people know that we had this
hearing and were trying to gather information and background
sources, and I have several stories and things that I can share
on it, let me just pull a couple quotes here, just about the
fines and the mindset of when inspectors come.
One person told us that they were told that when an
inspector came, they said to them, ``if it takes all day, we
will stay until we find a violation''.
One person said, ``the EPA views businesses as an ATM to be
fined, regardless of the determinations of an investigation''.
Another one said, ``the determination of whether there is a
fine and the amount depended on the mood of the investigator''.
Said this one, ``there has been a culture change from one
of compliance assistance to one of scaring people into
compliance''.
And then this one, ``more stick than carrot''. I thought it
was interesting.
Now, I would tell you, just interacting with the two of you
and hearing your mindset and your view on this, I think if most
business folks were sitting across the table from you and
talking back and forth, they could work a lot of things out.
But, there is a real sense, and what Senator Heitkamp had
mentioned before, I have heard from numerous employers saying,
if I went back--and people that own small businesses--if I went
back 10 years ago, when someone showed up for an inspection,
they were extremely helpful to me and they were helping me find
safety issues. Now, they show up and they are just a fine.
And something seems to have shifted, and now it has gone
from ``I am grateful to have the help to walk around the
facility with fresh eyes,'' to, ``oh no, they are coming. I am
going to have to pay a fine for something, no matter what it
is''. So, I do not know if you could say what has occurred, but
that real life sense is out there, and so this perception that
for many is reality, of I do not want an inspector to come help
me to find safety violations because I know I am going to have
a fine. Even if it costs them all day to stay here, they are
going to find something.
Some of this goes back to the training you all talked about
before. I know EPA had the wonderful experience of several
years ago having someone in Region 6 say, ``the way we do this
is like the Turks used to do it, to go into town and grab five
guys and crucify them. Then there are no problems after that''.
Obviously, that is not the EPA's attitude as a whole. And, when
you talk about trying to train people in regions and making
sure it is consistent, that comes to mind immediately when you
think there was a region that was most certainly not consistent
with the EPA national value.
I am actually going to get to one--my question is, how do
you balance out the issue of compliance and the real deterrence
that a fine is and being helpful to someone in being able to
walk through? We want any business to have a fresh set of eyes
to look around for health and safety issues. We do not want
them to be able to push us away. How are we currently trying to
balance that out to reengage with business, to say, we want to
be able to help in the process? And, I will have just both of
you mention that.
Ms. Shinkman. Thank you. First, I would like to address the
disconnect that you have described. Clearly, that is what it
is, I hope. Certainly, from EPA's perspective, we really
believe in our mission to reduce pollution and protect the
health of the communities that we all serve. That really is the
mission. That is how we feel about it. I understand that there
is a perception out there as you have well described. And, so,
we need to work at getting around that disconnect.
I believe there are a couple ways that we have tried. We do
have compliance assistance available for small businesses. We
have tried to improve on that and making it available.
We have also focused on some of our penalty and enforcement
methods to look at ways to deal with small entities, with small
violations. We have expanded our--we call them Expedited
Settlement Agreements (ESA). These are ways that we can, when
there is a small violation seen in the field, we can address it
rather quickly. We use this for things like underground storage
tanks where there might be a leak, some recordkeeping in some
of our chemical violations, things that we see that are small,
can be remedied quickly. We try to have what is really a non-
negotiable agreement. It is small. These are the facts. We can
all agree to them quickly. And we have tried to expand our use
of those so that when there is a small violation that can be
dealt with quickly, we can use that.
Senator Lankford. Can you walk me through the settlement
process? And this will be one, Mr. Barab, I want to get a
chance to visit with you, as well. You both mentioned the
settlement. There is a very clear process, and as Senator Ernst
had mentioned before, I get it as far as the benefit and the
cost and the risk and all those things. I get the process and
going into that.
Ms. Shinkman. Sure.
Senator Lankford. The challenge is, once you go through
that, you set a fine and then there is a process to have a
conversation on the settlement. Here is the fine. Now, let us
talk about if we are going to settle on it. How does that part
of the process work? What is the mechanics of that?
Ms. Shinkman. OK. Let me start maybe a little earlier. It
really is an incremental process. An inspector goes out and
sees that there is a problem.
Senator Lankford. Right.
Ms. Shinkman. Unless it is an emergency that needs to be
addressed immediately, there is usually a discussion about it
and then they come back to the office and discuss what, if
anything, needs to be done about it from an enforcement
perspective.
After that determination is--if there is a violation that
actually merits taking enforcement action, then there is a
discussion about what level of enforcement to take. Is this
something that can be dealt with administratively by going back
and talking about it and seeing whether it is a small, quick
resolution or whether it is something that is going to require
changes at the facility that would require some investment and
some monitoring. An awful lot of them do not, but if they do,
there is a further discussion about that.
Senator Lankford. Can I ask you a quick question on that?
When you find a violation, does that warrant a fine every time?
Ms. Shinkman. It depends----
Senator Lankford. As far as, do you feel an obligation
coming at you either legislatively or from a guidance that if
there is a violation, that is a fine?
Ms. Shinkman. We have enforcement discretion and we can----
Senator Lankford. OK. Mr. Barab, do you all have
enforcement discretion, as well? Do you feel that----
Mr. Barab. I would say, generally, we are required to issue
a fine of some sort when we find a violation.
Senator Lankford. Every time.
Mr. Barab. There is some discretion there, but, yes, that
is the----
Senator Lankford. OK. I want to talk about that. I hate to
interrupt you, but I wanted to get some clarity on that to make
sure we are heading in the same direction. Go ahead and you can
finish, Ms. Shinkman.
Ms. Shinkman. So, there is enforcement discretion. We
decide whether it is something that within our policies merits
further action. That further action may be an administrative
order or an agreement that we talk about, we reach agreement
that the first thing we want to do is abate whatever the
problem is.
Senator Lankford. Right.
Ms. Shinkman. And, so, that is what is addressed first,
whether it is going to require additional action, stopping
something, starting something, try to resolve it that way. If
we reach that resolution, in most cases, there will be at least
some penalty because there was noncompliance, and then we go
through the factors to decide how large the penalty is.
In a bigger case, what would happen, generally, is there
would be further discussions and there may even be a referral
to the Department of Justice, and then there are further
discussions within EPA, with the Department of Justice, and
with the entity that is out of compliance. So, it is an
incremental process, an iterative.
I think a lot of the things that you are hearing about tend
to be the small ones. But, the reality is, there is usually a
process and there is a lot of dialogue back and forth before
there is an ultimate resolution about what injunctive relief or
change needs to be made in the processes to make sure that the
company is in compliance going forward, what mitigation needs
to be done for any damage that might have--like a spill or
something like that that needs to be cleaned up, and then, what
penalty do we need under the standards that we have.
Senator Lankford. We are still back to the settlement
thing. The process, how to get there. Once the fine has been--
the settlement that you are describing, is that typically a
judicial settlement? We are in a court and we are trying to
work through that? Or----
Ms. Shinkman. It could be both.
Senator Lankford [continuing]. What is the other
settlement?
Ms. Shinkman. The other is administrative, in which case we
would have either an order that is appealable or a signed
agreement, and that goes through our administrative process to
the Environmental Appeals Board.
Senator Lankford. And that is a more fluid conversation
that is happening----
Ms. Shinkman. Yes, it is.
Senator Lankford [continuing]. Across the table. We agree
on the facts, now, what is a reasonable fine, and you are
discussing that process.
Ms. Shinkman. We certainly try to reach agreement on all of
those. Obviously, we do not always.
Senator Lankford. Mr. Barab, is the settlement process
pretty similar for you all? Again, I understand once you get to
the spot of a fine, an assignment, you had mentioned very well
about the exact numbers and the changes that have happened in
the Budget Act and such from there. But, I am talking about the
settlement process at the end.
Mr. Barab. Yes. Our process is slightly different than
EPA's. Once we finish the inspection, the inspector then goes
back to the office. The area director actually has authority
over what the penalty will be, assuming any kind of violations
have been found.
At that point, the employer has 15 days to contest the
citation, if the employer wants to do that. During that 15-day
period, there is a chance, and we strongly encourage employers
to engage in what we call our informal settlement process. So,
the employer comes into the office, the area office, and sits
down with our area director and they try to work out some kind
of settlement, if possible. And, again, looking at the
violations there were, looking at the employer's defenses,
looking at the abatement period. All of those things are
discussed during that informal period. And, again, in about
two-thirds of the cases that we have, we do reach some kind of
settlement at that point with the employer.
Now, if no settlement is reached, then within that 15-day
period, the employer can contest, legally contest, the
citation. That then goes to the Occupational Safety and Health
Review Commission. There are Administrative Law Judges (ALJ)
that decide that, and that case then moves up that ladder.
Senator Lankford. OK. Let me ask the question about the
flexibility that you have or do not have on fines. Is it a
guidance or is it statutory that if you see a violation, there
has to be a fine?
Mr. Barab. That is statutory, and our maximum penalties are
set also by law.
Senator Lankford. OK----
Mr. Barab. But we are also----
Senator Lankford [continuing]. But as far as a minimum
penalty, that is statutory that it requires----
Mr. Barab. The only place there is a minimum penalty is
with willful violations, and that is a $5,000 minimum, $70,000
maximum. As I mentioned, there are also--by statute, we also
have to consider, as EPA does, size, history, and good faith.
So, there are almost always reductions there.
Senator Lankford. So, at the end of this, as you all both
mentioned that the goal of the penalty is always deterrence,
and I get that. But, the goal of the regulation and of the
statute is usually health and safety and environmental
protection and such, and the fine, the penalty here, becomes a
vehicle to help accomplish some of that. But, I do not know of
anyone that has written a statute to make sure that we fine
some entity, as well. That is the worst case scenario for us.
I give you the easy example we have all experienced. My
daughter when she was in high school was pulled over by a
police officer because her dad, me, was not helping her watch
for things like a headlight that was out. Now, she is also a
teenager and she can watch for that herself, but as the dad and
the 16-year-old gets pulled over with a headlight out, she was
given a warning by the police officer and said, ``hey, did you
know? '' She said, ``I did not know, did not catch it.'' He
gave her a warning.
We got back home and spent $125 rearranging the front of
her car to do a new headlight. Joy, OK. She got a warning. We
fixed it. The health and safety issue of getting both
headlights working was accomplished.
What I am trying to figure out is, how much flexibility do
your compliance folks have to be able to walk in and say, you
know what? That trash can is in the wrong spot, and someone to
say, I did not realize. When I walk through manufacturing
locations, as you all do all the time, as well, on the wall
somewhere, there is a library of four-inch plastic binders that
are sitting up there with all the regs and all the requirements
and most of the people that run the manufacturing locations
live in dread that they have missed a page somewhere from those
six four-inch binders that are up there on the wall somewhere
trying to make sure that they miss it.
How much flexibility do you feel like you have to be able
to help people, to say, you missed one, and it is not
necessarily a fine, and it is not necessarily, a leak that is
going to damage a lot of folks or was not necessarily health
and safety, but they missed one.
Mr. Barab. There are certainly small things that we correct
as we walk around, or ask the employers to correct. There is no
doubt about that. But, again, our concern is saving lives,
and----
Senator Lankford. Sure.
Mr. Barab [continuing]. Our serious violation, which is
only the maximum of $7,000, there is a requirement the way a
serious violation is defined in that it has to be likely to
cause death or serious physical harm. So, those are, again,
fairly serious, as the term is, when we find those, and----
Senator Lankford. I have no issue with that. I am talking
about minor fines.
Mr. Barab. Yes.
Senator Lankford. One of my manufacturers was fined because
he had a shelf in his workspace for one of his workers that was
six inches too low. Now, I do not know all the story on that,
but I stood on the floor with him and I said, ``that shelf
right there? '' And he said, ``Yes, that shelf right there, we
had to raise by six inches and we got a fine for it.''
Mr. Barab. Yes. I mean, we hear stories like that, and
generally, when we look into them, usually, there is something
else accompanying that with it that is of a more serious
nature. But, when we have situations like that, we are always
happy to look into them, but it sounds unlikely that there
would be any kind of fines----
Senator Heitkamp. But, I think what we are asking is, let
us say you see an extension cord that is located in a location
where somebody could trip. That is obviously a hazard. You note
it. Are you telling me, because that is a violation, you have
to assess a fine?
Mr. Barab. We also have various means. We have other than
serious fines, where they can be very low. We have a quick fix,
where we can--if the employer fixes it right away, we can
either minimize or, in some cases, eliminate the fine, so----
Senator Heitkamp. Yes, right there. Stop.
Mr. Barab [continuing]. OK.
Senator Heitkamp. You said, ``eliminate the fine.'' So, you
do have discretion to not impose any fine----
Mr. Barab. In exceptional cases----
Senator Heitkamp [continuing]. Based on----
Mr. Barab. In general, our law requires us to issue a fine
when we find a violation, especially if it is a serious
violation. But there are other than serious violations. Now, an
extension cord, I mean, that is something that it can cause
fires, electrocutions----
Senator Heitkamp. No, I know.
Mr. Barab. It is not necessarily--I mean, people throw some
things out, but they actually, when you look at them, when we
look at the past history----
Senator Heitkamp. No, I thought it was a good example,
because it can be, in the wrong place, incredibly dangerous.
But, my point is, I would have to go back and take a look,
because I am shocked that you could not waive a fine or a
penalty in its entirety given kind of the relationship and
compliance and what do they know and lack of knowledge and
severity.
So, we will followup. I have to go vote.
Senator Lankford. Thank you. We will finish up in just a
couple of minutes, because I am going to have to go follow and
vote, as well.
This is one of the areas that we want to examine. It is the
reason we have this type of hearing and debate. We will dig
into it and find out from you all what you need, because I
would hope that you are in the same position that we are
working on health and safety and making sure we are protecting
lives and this is not all about fines. As you mentioned before,
the fines are not coming back to the entity themselves, anyway,
so this is not a, quote-unquote, ``money maker'' for the
agency. It is a deterrent, but we have to find a way to be able
to balance this out.
One of the things that I had noticed was in 2011, the
President issued a memorandum for the heads of the executive
departments on regulatory compliance. OSHA and EPA were
specifically noted in that for being good actors in it and
highlighted some of the compliance and enforcement information
and how you are making that publicly available. So, that is a
positive thing to say. Your agencies both are building in
transparency on the basic issue of compliance and enforcement
information.
Not every agency is dealing with this. I am not going to
ask you to answer for everyone else. But, the Department of
Transportation (DOT) updated their stuff in 2011, and then
since 2012, there has been no change at all on their website on
the information on compliance and enforcement information.
So, one of the things that we are asking of the
administration is to help us, when the information gets out
there and is helpful, to make sure all agencies are actually
fulfilling that, are getting that information out, which both
of your agencies are, but the Department of Transportation is
not. So, that kind of consistency is extremely important.
We do need to work with your entities on things like minor
violations. Was a poster missing? Was a piece of paperwork
missing? Again, I had another agency and another entity that I
dealt with as a manufacturer in my State that had not turned in
paperwork a particular year saying they had nothing to turn in,
and their wrong assumption was, I had nothing to report and so
I did not have to turn in that report this year because there
was nothing to report. They ended up having a huge fine come
down on them for not turning in paperwork saying they had
nothing to turn in.
Well, again, that just begs this question of how is that
helping health and safety? That is a paperwork violation issue.
There should be a, hey, you did not turn that in. You are
right, we did not turn it in. But, instead, they had a fairly
significant fine that came down on them for that. That is the
kind of stuff that we need to figure out, to say, if you feel
bound, or if agencies feel bound to be able to do a fine in
that type of situation, then we have a problem.
One of our businesses said that they were hesitant to
voluntarily invite OSHA into the workplace to do the onsite
consultation programs because of their concern over that. Now,
I heard from both of you, you want to work especially with
small businesses to do the onsite consultation, to be able to
help them through that. What is something that can be done to
encourage more businesses to say, invite us to come in. We are
not coming in to fine you. We are coming in to be able to help,
to do almost a pre-inspection inspection.
Mr. Barab. Yes. I often call our consultation program our
best kept secret. It is a wonderful program. We try everything
we can to really promote it, not only ourselves, but through
associations. And, I want to emphasize, and we try to emphasize
this with employers, we fund at least 90 percent of the
consultation program. We do not run it, though. We give that
money to the States and they run it. So, it is totally separate
from OSHA, and that is what we try to emphasize to employers,
that this is totally separate from OSHA. It is a free visit,
basically, that small employers can receive and everybody
should be taking advantage of it.
Senator Lankford. But, some are concerned that they should
not because they are, for whatever reason--what I am telling
you is, it is a good program----
Mr. Barab. Yes.
Senator Lankford [continuing]. And it does focus on health
and safety and on compliance on issues and thinking outside the
box and some things. There has to be a way to be able to
communicate this so that individuals know, hey, this is a
neutral spot. Unless there is some major gross something that
is here, this is a good spot.
Mr. Barab. Well, we would love to work with you on ways to
do that.
Senator Lankford. OK.
Mr. Barab. There are a lot of myths out there that we would
love to be able to combat and we would love to work with you to
do that.
Senator Lankford. Well, this is something, I am saying,
perception and reality. This is a business owner that said it
to me directly. Yes, I know there is that type of a
consultation. There is no way I would take that. Ms. Shinkman.
Ms. Shinkman. And, I would just briefly like to say,
particularly for small businesses, we have an audit policy
where, if they voluntarily disclose and fix what it is, there
is minimal, if any, penalty at all. So, we encourage it. The
sooner it is disclosed, the more voluntary audit of themselves
to determine what the problems are----
Senator Lankford. Is that the eDisclosure program?
Ms. Shinkman. Yes, it is.
Senator Lankford. OK. Tell me a little bit about how that
works, and what I would like to know is, how do you evaluate
its effectiveness on how it is actually accomplishing the
mission? How do you evaluate that?
Ms. Shinkman. Well, it is about 2 months old, so I am not
too sure----
Senator Lankford. OK. It is a little early, then, yet.
Ms. Shinkman. I do not think we can give you any kind of an
evaluation. But, it was formed so that we could quickly see
these audit disclosures for a number of cases, particularly
smaller ones like you have described, and for small businesses
where they, through a web portal, give us notice of what they
have disclosed--what they are disclosing----
Senator Lankford. So, give me an example of some of this,
because this is their own safety systems, right, their own
safety checks that they are doing. They find something, know it
is a violation. Give me an example of something they would turn
in and say, hey, we found something. We are going to report it.
Ms. Shinkman. We have determined that we do not have the
number of containers that we are supposed to for a certain
thing, or they have not been updated at a certain time. So, we
are going to do that. We discovered it at X date. We did
whatever it is to remedy it. It will be done by Y date. And, we
are disclosing it to you now and we have a policy for making
sure that it is not going to happen again. And, this is all
disclosed electronically, and if all of the criteria are met,
they will receive a notice that it has been disclosed and their
issue would be closed out.
Senator Lankford. And, including the benefit? Penalty, as
you mentioned before, part of the penalty is did they receive
some sort of benefit by delaying that. Would that be waived, as
well, or would that be something you guys would look at and go,
hey, you did not change this. You got an arbitrary benefit that
other companies did not get.
Ms. Shinkman. I think that would not apply here, because
part of the criteria is the early disclosure.
Senator Lankford. OK.
Ms. Shinkman. So, the criteria themselves eliminate those
problems.
Senator Lankford. OK. That will be one that we want to
watch, to be able to see how that works, because that gives a
clear set of guidelines out there that people can find and note
and to be able to help self-manage. I just want you to know
from our Committee, we are going to watch and figure out how
that is being evaluated to see if that is something that can be
shared with other agencies and entities.
I would also share, as well, and this is just in our
ongoing conversation about fees and fines and penalties, we are
watching some entities like Fish and Wildlife Service. Fish and
Wildlife Service has the opportunity for a penalty or to be
able to make a contribution to a third-party organization that
is a nonprofit. We are trying to figure out who sets that, who
guides that, where does that money go. That is money that would
have been to the General Treasury now that is to certain
outside third-party entities for mitigation or whatever
purposes, and, so, we are asking, I think, a fair question for
the taxpayers' behalf.
If it is a fine that goes to the General Treasury or that
you donate to a third-party organization, we want to know who
picks that and where does that go and what is the long-term
benefit of that.
EPA uses Supplemental Environmental Projects (SEPs), but my
understanding is that is you can have a penalty or you can
basically fix it and here is what we would encourage you to do
in some ways. How are those SEPs decided?
Ms. Shinkman. Those SEPs are voluntary by the company if
they--to set off part of the penalty by doing a project. Let me
make it clear that they are never cash donations.
Senator Lankford. Right.
Ms. Shinkman. They are always voluntary projects to help
the environment. There needs to be a nexus between what that
project is and what the violation was. There will also always
be some cash penalty. It is not 100 percent mitigation against
the penalty and----
Senator Lankford. Is it typically 80 percent? Because the
goal, again, is to deal with health and safety and environment
at that point. So, you are saying it could be a control project
or monitoring project or something else around them or around
the city or around the community----
Ms. Shinkman. It could be----
Senator Lankford. What does it typically look like?
Ms. Shinkman. Typically, it looks like something like a
decision to do monitoring for children for asthma or for lead
in a certain school district for a certain period of time. The
asthma might be the result of a clean air violation. The lead,
for a different kind of--the lead monitoring, those sorts of
things, purchase of emergency equipment if there has been a
violation that is similar to that.
So, here is a policy. We have redone our entire policy so
that it is much clearer. We did that last year, so the
standards that are necessary to meet--we have strict standards
and they are more clearly set out. A small business can get up
to 100 percent set off of their penalty. Others, usually, it is
around 80 percent. It really depends on the quality and the
type of the project. But, it is never money that is just handed
to somebody. It is never a project that EPA itself controls.
Senator Lankford. Right. EPA is different than other
entities on that. There are other entities that are doing
mitigation separately to an outside third party rather than a
fee or fine, and that is one of the questions we will ask.
Obviously, I am not going to ask you to answer for another
entity on that.
We are quickly running out of time, and I know you are
thoroughly enjoying this conversation, but we do have votes
that are happening currently. I have to head over to that. I am
not going to hold you over to be able to come back and forth.
I do want to maintain this conversation. What we would ask
of you is I am sure that there are ideas that you or your
entities would be interested to be able to share ways they can
improve this process, whether that be process changes, issues
in statute that had become a problem or that create a barrier
between the people we serve and those of us who serve them, as
you do, as well. That should be fixed and could be fixed. I
want you to know, those are the type of things we are also
looking for, as well. This is not a one-way conversation.
And for this Committee, we hope to be able to put products
out in the days ahead to say, let us help fix some of the
broken relationships that we have there and still be able to
work on health and safety and environmental protection that
need to be done. So, as you have thoughts on that, we are free
to hear those and we are interested in those, as well.
I appreciate you being here and for the work that you put
into this conversation and we will do some followup with some
questions for the record in the days ahead on that.
I would like to make a statement to all that on February
24, this Subcommittee will also hold a hearing examining the
burden of Federal statutes and regulations placed on State and
local governments, what we have learned since the passage of
the Unfunded Mandates Reform Act of 1995, and how the Unfunded
Mandates Information and Transparency Act can improve upon
those efforts.
This will conclude today's hearing. The hearing record will
remain open for 15 days, until the close of business on
February 26, for the submission of statements or questions for
the record.
With that, thank you very much to our witnesses. This
hearing is adjourned.
[Whereupon, at 10:48 a.m., the Subcommittee was adjourned.]
A P P E N D I X
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