Penalties for Noncompliance Will Soon Cost You More

We have long said that failing to remain in compliance with the many different regulations out there will cost you more in the end. With an increase in penalties fast approaching, it’s more true now than ever before.

Due to Congress amending the Federal Civil Penalties Inflation Adjustment Act of 1990 in 2015, the Environmental Protection Agency (EPA) and Occupational Health & Safety Administration (OSHA) are just two of the regulatory entities required to increase their civil monetary penalties, no later than August 1, 2016.

EPA Penalties on the Rise

Previously the EPA has only adjusted penalty levels, for inflation, once every few years.  The new law requires them to apply two new adjustments: a one-time catch-up provision and annual adjustments that are set to begin on January 15, 2017.

The catch-up provision requires agencies to adjust fines to account for inflation.  To do so, they need to apply inflation calculations based on the date penalty amounts were statutorily enacted or adjusted. All increases under this provision have a cap at 150 percent of the penalty’s value on November 2, 2015. The 2015 amendment to the Federal Civil Penalties Inflation Adjustment Act of 1990 required these adjustments to be published in the Federal Register as of July 1, 2016.

Additionally, beginning in January 2017, agencies must perform annual reviews of statutory civil penalties and make necessary adjustments due to inflation. In the past, some agencies were exempt from having to make inflation-based adjustments and others simply went years without doing so.

Finally, these agencies have been granted the ability to make annual adjustments without having to follow rule requirements defined in the Administrative Procedure Act.

Penalties handed out by the EPA are increasing differently, based largely on the particular environmental provisions being implemented. For example, under statute 33 U.S.C. 1319(d) of the Clean Water Act, the maximum penalty will increase from $25,000 to $51,570. Meanwhile, penalties under 33 U.S.C. 1321(b)(7)(D) of the same act will go from $25,000 to $44,539. In other areas, penalties will increase evenly across entire statutes.

As you can see, the increases are going to be quite steep and are worth noting.

Substantial OSHA Penalty Increases

Like the EPA, OSHA is also increasing its penalties and doing it in rather large fashion, with penalties likely to continue increasing in the future. Additionally, the new act removes a rule which previously allowed the administration to be exempt from inflation-based increases.

Under the new act, the maximum penalty OSHA can issue for its “serious,” “other-than-serious,” “posting requirement,” and “failure to abate” violations will bump up from $7,000 to $12,471. Elsewhere, penalties for “willful” or “repeated” violations will move from a maximum $70,000 to $124,709. These numbers, among others, show that OSHA penalties are set to increase a massive 78 percent across all violations beginning August 1.

The major takeaway here is that penalties for failing to comply with regulations are going to burn a bigger hole in your pocket than ever before. It’s clear that taking shortcuts when it comes to following regulations is a terrible idea and one that will end up costing you more over the long haul. You might think you’re paying a lot of money for proper waste disposal, but when you compare it to what you could be paying in fines, it’s miniscule.