INDUSTRY ALERT: Biden Cabinet Picks, Agency Actions Signal Renewed Focus on EHS Regulation & Enforcement in 2021
Posted on January 20, 2021 | in Environmental Compliance
Businesses should prepare for a major shift in the U.S. environmental and workplace health & safety regulatory landscape, as the incoming Biden Administration has signaled it will take a more active approach to EHS regulation and enforcement in 2021 and beyond.
The previous Administration’s policy of deregulation and relaxed enforcement, particularly with regard to environmental standards and occupational safety and health standards, sent a strong signal to the regulated community that EHS regulation and compliance would not be a top priority. This was confirmed by a significant downward trend in inspection and regulatory enforcement activities by key environmental and occupational health and safety agencies over the past four years, as well as marked reductions in penalties for non-compliance.
A prime example of this trend has been recent inspection and enforcement activity at the U.S. Occupational Safety and Health Administration (OSHA). A study by the Center for Public Integrity showed that OSHA conducted fewer inspections during the first three years of Trump’s presidency compared to the same period of President Barack Obama’s second term. This is despite the fact that the U.S. labor force grew by 16 percent between 2019.
Source: Vox, 2020 https://www.vox.com/2020/8/18/21366388/osha-worker-safety-trump
This chart also shows that since March 13, 2020 when the COVID-19 pandemic was officially declared a national emergency in the U.S., the number of OSHA inspections dropped sharply. This effect could be explained by a possible reluctance to send inspectors into workplaces where COVID-19 exposure could put inspectors at risk, but it comes at a time when verification of workplace health and safety compliance is more important than ever.
One probable cause for the continuing decrease in inspections is the continued reduction in numbers of inspectors at OSHA, a trend that had actually started prior to the Trump administration. A 2019 report from the National Employment Law Project (NELP) shows that in 2010, U.S. OSHA employed 1,016 inspectors, virtually the same number it had three decades earlier. This is despite the increase in sheer number and breadth of workplace health and safety standards implemented since the Agency was founded, as well as 30 years of growth in the American labor force. By 2016, the agency was down to 952 inspectors, and by Jan. 1, 2019, it had dropped to 875. As of August 2020, that number had dropped further to 761 inspectors who are responsible for monitoring workplace health and safety compliance at millions of workplaces across the U.S.
In addition to the dwindling number of inspectors, OSHA has been increasingly lenient on employers who are cited during workplace inspections. A recent analysis looked at the 100 largest enforcement cases brought by the Agency from 2015 through December 2019, and showed that employers in these OSHA enforcement cases received, on average, a 41 percent reduction in penalties compared to the maximum penalty amount after taking steps to abate violations. In fact, OSHA rarely imposes maximum penalties, even when employers have committed repeat or willful violations. Only 12 of the 63 companies in the study who committed repeat or willful violations received the maximum penalty, and one employer received a 93 percent reduction following abatement activities.
On its face, the policy of reduced penalties for abatement of hazards seems fair toward employers who are willing to promptly comply with the standards, but some fear it could also diminish the effectiveness of penalties in compelling employers to safeguard their workplaces before a citation is issued, if at all.
The U.S EPA has experienced an even more dramatic reduction in numbers of inspections and enforcement activities than OSHA in recent years. EPA inspections in 2018 fell to approximately 10,600 — roughly half the number EPA conducted in 2010. Steady budget reductions dating back to 2012 are a likely contributor to this decrease in enforcement, but that trend has notably accelerated during the Trump Administration, with the Agency relying more heavily on self-audit and self-reporting by regulated businesses to verify compliance. As a direct consequence, the number of civil cases the EPA initiated and completed during 2018 reached a 10-year low. At the same time, civil penalties levied against violators totaled just $69 million compared to an average of approximately $500 million between 1994 and 2018 (adjusted for inflation) – the lowest in 25 years.
Criminal prosecutions for EPA violations also fell sharply during the Trump Administration. The Agency pursued criminal charges against 105 defendants during fiscal year 2018, yielding sentences totaling 73 years in prison. However, this represents a roughly 50 percent drop from 2017, while the total number of criminal defendants charged also declined compared to 2017.
A Changing of the Guard
The de-prioritization of EHS regulation and enforcement during the Trump Administration will likely be reversed during the Biden Administration. Democratic control of Congress, as well as Biden’s Cabinet picks for key EHS agencies all point to a major shift in policy, and a re-prioritization of EHS regulation and enforcement.
Let’s take a look at some of Biden’s key Cabinet picks to gain some perspective on what changes and regulatory activity U.S. employers might expect over the next four years.
Biden Announces Pick for Secretary of Labor
On January 7, Biden announced he would name Boston Mayor Marty Walsh to be Secretary of Labor, putting him in charge of workplace health and safety regulatory agencies including OSHA, MSHA and other agencies that have direct oversight of employers in the U.S. Walsh, a self-described “lifelong champion of working people,” brings a track record of supporting workplace protections. Walsh has deep ties to labor organizations, and served as head of Boston’s Building and Construction Trades Council where he oversaw the implementation of city labor policies prior to becoming mayor in 2018. Walsh also has the public support of some of the nation’s largest and most progressive labor union leadership including AFSCME President Lee Saunders, AFT President Randi Weingarten, and AFL-CIO President Rich Trumka who said of Walsh, “Boston Mayor Marty Walsh will be an exceptional labor secretary for the same reason he was an outstanding mayor: he carried the tools.”
All signs point to Walsh leading the Department of Labor in a direction that will favor workers’ rights above all, and pay attention to the needs of the U.S. labor movement.
Key positions for the incoming administration’s environmental agencies include former North Carolina environmental chief Michael S. Regan for EPA Director, former Obama-era EPA Director Gina McCarthy to lead the new White House Office of Climate Policy, and Brenda Mallory, Director of Regulatory Policy at the Southern Environmental Law Center to head the White House Council on Environmental Quality (CEQ). The policy track records of each of these picks indicate that the Biden Administration will assume an aggressive environmental protection and climate change policy stance, renewed emphasis and increased budget for inspections and enforcement, revival of Obama-era environmental protection initiatives including the Paris Climate Accords, and development of more stringent environmental standards for regulated businesses, particularly those in the energy sector.
New Policies & Regulations
In addition to Biden’s Cabinet picks and the policies they are projected to implement, there are several new and proposed EHS policies and regulations already in the works that indicate a continued emphasis on EHS compliance and enforcement. Here are a few worth noting:
The EPA’s Greenhouse Gas Reporting Program (GHGRP) currently requires reporting of greenhouse gas (GHG) data and other relevant information from large GHG emission sources, fuel and industrial gas suppliers and CO2 injection sites in the United States. The GHGRP covers approximately 8,000 facilities in the U.S. who are required to report their emissions annually.
However, the number of facilities and businesses required to report GHG emissions may be dramatically expanded within the next few years. In June 2020, the Securities and Exchange Commission (SEC) announced plans to develop rulemaking and guidance on the federal monitoring of environmental, social and governance (ESG) issues, including climate impacts and other environmental performance indicators. This decision was issued following multiple complaints from investor advocacy groups about inconsistent disclosure practices due to voluntary reporting frameworks. This means that publicly-traded companies may soon face additional requirements to disclose climate risks and greenhouse gas emissions.
“Regulation by Shaming”
Under the Biden Administration, OSHA is also likely to resume the practice of what some refer to as “regulation by shaming.” That is, issuing press releases about violations cited and fines issued in enforcement actions, and publicly disclosing names of violators. Under the Trump Administration, OSHA has all but halted the issuance of press releases on enforcement actions, citing just 158 releases in 2018 – one-third of the 470 issued in 2016. While highly controversial, one Duke University researcher found that the policy was notably effective and led to a significant improvement in compliance.
Federal Workplace COVID-19 Standards
An emergency OSHA regulation for workplace COVID-19 protections could also be on the near horizon. Earlier this year, labor organizations including the AFL-CIO sued OSHA in attempt to compel the agency to develop and implement such a standard, but to no success. Michigan, Oregon, California and Virginia have already implemented emergency COVID-19 Standards, and those requirements may provide some insight into what federal standards might look like.
Civil Monetary Penalty Inflation Adjustment
Each year since 2015, all Federal agencies have been required to update their fines and penalties to account for changes to inflation under the Federal Civil Penalties Inflation Adjustment Act of 2015. As a result, monetary penalties for violations of federal regulations have increased at a steady rate of approximately two percent each year. 2021 will be no different, with 2021 penalty amounts increasing by 1.8 percent relative to 2020 amounts.
OSHA Debt Collection Initiative
On December 22, 2021 OSHA announced a new policy that enables the Agency to more aggressively pursue collection of civil monetary penalty payments from employers cited during inspections. If an employer fails to make payment for a cited violation, and is not on an affordable payment plan, OSHA will place the establishment on a priority list for further inspection. This could, of course, expose cited establishments to additional citations and subsequent liability.
OSHA Site-Specific Targeting (SST) Policy
In October 2019, OSHA announced it would re-institute it’s Site-Specific Targeting (SST) policy. This policy utilizes detailed injury and illness tracking data to more effectively identify high-risk workplaces and target them for programmed inspections. On December 14, 2020 OSHA announced updates to the SST policy that creates a new targeting category for workplaces with consistent injury and illness rate increases over a three-year data collection period. It also allows records-only inspections when a compliance safety and health officer (CSHO) determines that incorrect data led to an establishment’s inclusion in the program. According to the agency, this change ensures that inspectors will conduct a full inspection only when an employer actually has elevated injury and illness rates. In short, OSHA is leveraging the data collected through its Improve Tracking of Injuries and Illnesses Final Rule and Injury Tracking Application (ITA) to further refine its inspection and enforcement activities, and zero-in on violators.
Fall 2020 Regulatory Agenda
In addition to these recent policy and regulatory changes, the Office of Information and Regulatory Affairs (OIRA) and Office of Management and Budget (OMB) published the 2020 Fall Regulatory Agenda in Early December 2020. It provides valuable insights into the future of the EHS regulatory landscape in the U.S. across all agencies, including OSHA and EPA.
An Active Approach to EHS Management
Taken together, all of these regulatory actions and indicators from the incoming Biden Administration suggest that businesses must prepare for a more rigorous federal approach to EHS regulation and enforcement.
Assuming an active stance toward compliance is a must if employers wish to not only minimize compliance risks, but to remain competitive. Many of today’s most successful businesses strive to go beyond compliance, recognizing the real benefits to employee well-being, productivity and profit that come from more actively managing risk. In today’s business environment where EHS is increasingly integral to the overall performance of an organization, an active EHS management approach can provide a competitive advantage. Agility is key. If COVID-19 and 2020 have shown us anything, it’s that adapting to and capitalizing on the challenges we face is vital to the survival of the business.
2020 also illustrated the need for defensible compliance. The U.S. Department of Justice Evaluation of Compliance Program Guidelines were updated in June 2020, and one of the key elements of that policy is that organizations need a defensible audit trail and system of record for compliance activities. This means maximizing the visibility of EHS management and compliance activities, and documenting EVERYTHING. Breaking down the siloes to improve communication and coordination of those activities, and having effective systems to track them is a big step in the right direction.
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