penalty policy – preventing/avoiding the “big” fines

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Penalty Policy – Preventing/Avoiding the “BIG” FinesPenalty Policy – Preventing/Avoiding the “BIG” Fines

8-18-20118-18-2011

– KPA CONFIDENTIAL –

PRESENTED BYPRESENTED BY

Wayne CurtisDirector, Client Operations

wayne@kpaonline.com

678-298-5492

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QUESTIONSQUESTIONS

• If you have questions during the presentation, please submit them using the “Questions” feature

• Questions will be answered at the end of the webinar

– KPA CONFIDENTIAL – 44

THE NATION’S LEADERTHE NATION’S LEADER

ABOUT KPA • 25 Years Experience

• 3000 + Automotive Clients

• 50 consultants serving 43 States

• Degreed Staff

• Environmental and Safety Compliance Product

•22+ State Automobile Dealership Association Endorsements

• HR Compliance Product•14 State Endorsements

– KPA CONFIDENTIAL – 55

AGENDAAGENDA

OBJECTIVE:

• Review Recent News

• Review General Penalty Policy by Type

• Discuss Examples and What Not to Do

• Q and A

– KPA CONFIDENTIAL –

RECENT NEWSRECENT NEWS

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STATUS OF REGULATORY AGENCIES

• 8-15-2011 Investors.com article

• Regulatory agencies combined budget increase 16% since 2008

• Agency employment has climbed 13%

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RECENT NEWSRECENT NEWS

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WHAT DOES THIS MEAN?

• More inspectors and More regulations

Inspectors• 1/29/10 - Labor Secretary, Hilda Solis:• “OSHA received over 100 inspectors in our 2010 budget, as well as an additional 25 requested in 2011. We are also moving 35 inspectors from compliance assistance activities to enforcement….There’s a new Sheriff in town.”

Regulations• Federal Register total # of pages increased 18% in 2010• 379 new rules were passed in July• Federal Register - 4200 new proposed rules on the way

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DEPARTMENT OF TRANSPORTATIONDEPARTMENT OF TRANSPORTATION

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HAZMAT PARTSHAZMAT PARTS

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DOT / FAA COMPLIANCEDOT / FAA COMPLIANCEIMPORTANT EVENTS

May 11, 1996• Value Jet Flight 592• No HAZMAT training• Chemical Oxygen generators ignited

February 17, 2006 • DOT Raises the Maximum Civil Penalty from $32,500 to $50,000• DOT Raises the Maximum Criminal Penalty to $500,000 and up to 10 years in Prison.

•September, 2010•Raise Maximum Penalty to $55,000•$110,000 if results in death, severe injury, or significant property damage

– KPA CONFIDENTIAL –

DOT / FAA COMPLIANCEDOT / FAA COMPLIANCE

• Penalty Policy: “When the violation is a continuing one, each day of the violation constitutes a separate offense”

•§ 107.329 Maximum penalties

• HAZMAT PENALTIES

DO NOT SHIP HAZMATS VIA AIR

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OSHAOSHA

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HOW PENALTIES ARE ASSESSEDHOW PENALTIES ARE ASSESSED

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OSHA

ASSESSMENT• Minimum Penalties • History Reduction • History Increase • Repeat Violations • Severe Violator Enforcement Program • Gravity-Based Penalty – severity and prob

COMMON MITIGATING FACTORS• Size Reduction • Good Faith

GRAVITY COMPONENTS

• Other than serious• Serious• Willful• Repeated• Failure to Abate

– KPA CONFIDENTIAL –

OSHAOSHA

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Last year• Past history period expanded to 5 years• Violations can be separate and not grouped• Average penalty will increase from $1000 to $3000-$4000 per penalty• Employers with 251 or more employees - no reduction for size• “Good Faith” reductions only if a safety and health program in place

MOST AGENCIES – CIVIL PENALTIES INFLATION ACT

Not OSHA - no increase in 40 years

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OSHA Violation / Penalty TrendsOSHA Violation / Penalty Trends

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Citations and PenaltiesCitations and Penalties

VIOLATION TYPE PENALTY

WILLFULA violation that the employer intentionally and knowingly commits or a violation that the employer commits with plain indifference to the law.

OSHA may propose penalties of up to $70,000 for each willful violation, with a minimum penalty of $5,000 for each willful violation.

SERIOUSA violation where there is substantial probability that death or serious physical harm could result and that the employer knew, or should have known, of the hazard.

There is a mandatory penalty for serious violations which may be up to $7,000.

OTHER-THAN-SERIOUSA violation that has a direct relationship to safety and health, but probably would not cause death or serious physical harm.

OSHA may propose a penalty of up to $7,000 for each other-than-serious violation.

REPEATEDA violation that is the same or similar to a previous violation.

OSHA may propose penalties of up to $70,000 for each repeated violation.

– KPA CONFIDENTIAL –

EPA MVAC COMPLIANCEEPA MVAC COMPLIANCE

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OSHA vs EPAOSHA vs EPA

David Michaels – Asst Secretary OSHA to House Subcommittee

“In 2001 a tank full of sulphuric acid exploded at a Motiva refinery. A worker was killed and his body literally dissolved. The OSHA penalty was only $175,000. Yet, in the same incident, thousands of dead fish and crabs were discovered, allowing an EPA Clean Water Act violation amounting to $10 million — 50 times higher.”

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STAFF SUPPORT

THE FINES:

• Different penalty policies established – CWA, CAA, RCRA, etc• Typically up to $37,500 per incident per violation

ASSESSMENT• Minimum Penalties / Penalty Matrix, then • Multiple Penalties – Multiple Days possible, then • Gravity Based Penalty – potential for harm and risk, then • Extent of Deviation from Requirement, then• Economic Benefit of Non- compliance, then• Economic Benefit of delayed costs and avoided costs, and • Size of the violator….

•Penalty Policy: “in the case of a company with more than one facility, the size of the violator is determined based on the company’s entire operation, not just the violating facility”

EPA CIVIL PENALTY POLICYEPA CIVIL PENALTY POLICY

– KPA CONFIDENTIAL –

EPA PENALTY POLICY – CIVIL PENALTIESEPA PENALTY POLICY – CIVIL PENALTIES

2020

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Clean Air ActClean Air Act

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IMPORTANT PENALTY FACTORSIMPORTANT PENALTY FACTORS

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CIVIL vs CRIMINAL

• Willfully, Knowingly, Negligently (though should have known)

• Personal Injury, Property Damage, Damage to the Environment

Who Enforces? FAA, OSHA, EPA vs State

• EPA MVAC• New 6H rule delegated States

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6H Delegated States6H Delegated States

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Delegated StatesDelegated States

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RECAP: What Not to DoRECAP: What Not to Do

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• Ship HAZMATS via air

• Underestimate the seriousness of shipping HAZMATs

• Knowingly or willfully pollute/release/ship/violate

• Potential harm to human health, property, or environment

• Repeat violations

• Fail to give proper attention to regulators, inspections, letters, or responses

– KPA CONFIDENTIAL –

What Not to DoWhat Not to Do

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Some choose to do nothing as it relates to regulations and requirements:

Programs Training Facility Audits Paperwork

– KPA CONFIDENTIAL –

Inspection ResourcesInspection Resources

• Electronic Code of Federal Regulationshttp://www.gpoaccess.gov/ecfr/

• KPA inspection protocol• OSHA Field Operations Manual

– CPL 02-00-148

• CAA, CWA, RCRA, and EPA Civil Penalty Policy

• FAA – 14 CFR Section 13.16c

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Free Consulting Time!!!Free Consulting Time!!!

– KPA CONFIDENTIAL –

CONTACT INFORMATIONCONTACT INFORMATION

The recorded webinar and presentation slides will be emailed to you today including your local representative’s contact

information.

www.kpaonline.com

bross@kpaonline.com

866-356-1735