Your Solution for SMART Response Plans

Regulatory Compliance Management and the Price of Non-Compliance

Posted on Thu, Oct 25, 2012

The increasing number of stringent regulatory compliance standards compounds the complexity of industrial operations. Most companies believe they have the regulatory compliance component of their business under control. However, agencies such as OSHA, EPA, and DOT, continue to inspect and fine companies for non-compliance for a variety of infractions. 

A bill put forth to Congress entitled “Providing Assistance with the Paperwork from Excessive Regulations Act of 2012” was referred to the Committee on Oversight and Government Reform and the Committee on Small Business. While the bill is aimed at small businesses, the title highlights the “excessive” number of regulations that may be applicable to one facility. 

If government regulations are applicable to operations, companies need to prioritize compliance in order to minimize financial burdens resulting from fines, negative public perceptions, and potential government mandated shutdown of operations. Every month, audits and enforcement mandates are issued from various federal and state agencies that oversee industrial facilities. Costly non-compliance fines continually result from the lack of an implemented, thorough, or effective regulatory compliance programs.

Below are examples of the price of non-compliance for the first eight months of 2012. The list is comprised of a wide array of companies from various regulatory agencies (dates are by citation, not occurrence).

January

  • EPA: Collected a penalty of $25,347 from an oil company in Pennsylvania for alleged violations of oil spill prevention regulations at an oil storage facility
  • OSHA: Proposed penalties of $148,000 in fines to a chemical company in Nebraska for 25 safety violations, 14 of which relate directly to OSHA's standard regulating the process safety management of highly hazardous chemicals.

Feburary

  • DOT: The U.S. Department of Transportation announced it has resolved a record number of enforcement cases against pipeline operators over the last three years
  • OSHA: Cited chemical company $ 139,000 for eight repeat and 13 serious safety and health violations at its Delaware facility. Proposed penalties resulted from an inspection that was initiated as part of OSHA's Site-Specific Targeting Program for industries with high injury and illness rates.

March

  • EPA: Handed down a $1.2 million civil penalty to a power company for significant violations of the Clean Water Act, Chemical Bulk Storage Regulations, and Navigation Laws. A transformer explosion resulted in thousands of gallons of petroleum entering New York’s Hudson River.

April

  • OSHA: Cited an Atlanta based company for three repeat, three serious, and two other-than-serious safety and health violations at one of its plastics manufacturing facility. The proposed penalties totaled $71,000.
  • PHMSA: A fine of $251,170 was given to an energy company for serious violations regarding a pump/compressor related equipment failure.

May

  • EPA:  An Oregon chemical manufacturer failed to report the use of toxic chemicals at its facility. The violation of the Community Right-To-Know laws resulted in a penalty of $58,200.
  • EPA: According to a consent agreement, a frozen foods company will pay over $84,000 to settle hazardous chemical reporting violations at one of its facility.

June

  • OSHA: Penalties totaling $199,800 were presented to a vinyl manufacturer for a total of 30 safety and health violations; including three repeat violations for failing to properly ground electrical equipment and a lack of machine guarding.
  • EPA: A TSCA complaint resulted in a proposed penalty of $202,779. The complaint alleged that that the company had violated the 2006 IUR rule for 13 chemical substances.

July

  • USCG:  Charged an international shipping company $1 million in criminal fines, served probationary status, and required to pay $300,000 to the Department of Wildlife and Fisheries after the Coast Guard inspection revealed undocumented internal transfers and discharges of oily waste into the ocean.
  • PHMSA:  Proposed a record $3,699,200 in fines to one company. The agency listed 24 violations of hazardous liquid pipeline regulations, including failure to fix corrosion problems in the damaged pipe joint discovered 10 years prior.

August

  • PHMSA: Violations of federal pipeline safety regulations resulted in fines totaling more than $2.4 million for one company. Two employees were killed when pipeline repairs caused leaking crude oil to ignite.
  • EPA:  Fined an oil company $15,052 for failing to maintain and fully implement an oil spill prevention plan (SPCC). Negligence contributed to a release of approximately 1,500 gallons of used motor oil from a tanker truck at one facility. As part of the agreement, the company will spend $10,575 to upgrade equipment.

September

  • OSHA:  Cited a chemical company for 14 safety and health violations following an inspection. The company faces proposed penalties of $104,000

Effective technology can be inexpensively utilized to monitor continually evolving regulatory requirements. While some companies may use Excel spreadsheets to manage these requirements, this approach is typically burdensome and ineffective. As companies grow and operations grow, spreadsheets can be overwhelming and time consuming. Operators should consider utilizing database technology to ensure enterprise-wide compliance on multiple government agency fronts.

Key concepts for managing regulatory compliance from a corporate perspective include, but are not limited to:

  • Database Technology -
    • Each applicable regulatory requirement can be hyperlinked to associated site-specific information for each facility.
    • A database will minimize task repetition generated when multiple agencies have regulations that are related to the same subject matter.
    • Updating evolving regulatory information can be effectively managed across multiple facilities with the use of a central database.
    • The ability to search a database for key words and phrases associated with regulations will minimize maintenance time.
  • Compliance Consultations - Identify and utilize corporate resources or outsource compliance expertise to minimize the uncertainty of evolving regulations.
  • Facility-Specific Regulations - Identify mandatory operational and submission requirements for each facility associated with each regulatory agency.
  • Tasking - Assign compliance tasks, frequencies, due dates, persons responsible, and document completion actions.
  • Identify Best Practices - Apply best practices and potential mitigation measures related to compliance.

Regulatory non-compliance has proven to be expensive, time consuming, and potentially dangerous to company employees and the surrounding communities. An effective compliance management process can result in an efficient and integrated program that optimizes the efforts of company stakeholders, and improves compliance.

 

For a sample Emergency Response Checklist, download our helpful and informative guide.

Tags: USCG, PHMSA, OSHA, EPA, Regulatory Compliance, FEMA