Regulatory Fines for Compliance Infractions - My Advice for a Positive Outcome


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A good topic that is guaranteed to fire off robust conversation would be EPA and DNR fines for environmental compliance infractions. Regulated facilities within the manufacturing, agricultural, and construction industry sectors are the most commonly affected.

In this post we’ll discuss both sides of the equation, and how the levying of fines can actually open up the opportunity for a collaborative effort that ends well for all parties involved.

Facility managers and small business owners often feel as if they are being unfairly and unmercifully punished when a notice of violation comes in the mail accompanied by a potentially financially-crippling fine. But while many might feel that the fines can be heavy-handed or unfair on behalf of the regulatory agencies, there is one simple reason why they feel such legal action is a necessity…

To get your attention.

In my experience, I don’t believe it is the intent of the EPA and DNR to cripple facilities or hinder the business community by levying fines. I also don’t believe agency fines are levied just to exercise their regulatory power.

Whenever a penalty comes into play, it is usually the last step of a process that culminates over many months or years. A fine is issued when the regulatory agency feels it is necessary to protect human health and the environment, and it can result from a civil or criminal enforcement action depending on the egregiousness of the infraction.

The Notice of Violation and corresponding penalty is normally issued because of an imminent threat to residents or employees at a particular installation, or to the surrounding ecosystem. The severity of the penalty is directly proportional to the level of risk of exposure resulting from the failure to adhere to the law & rules. Typically, this is the last action after a series of attempts get the attention of a facility fails.

After a fine has been issued for an infraction, from my experience, a line is usually drawn in the sand separating the facility and the regulatory agency. At this point, a struggle often ensues where the facility managers and the regulators argue over the validity and necessity of the fine. This can lead to unnecessary litigation and a significant amount of time and money wasted on settling the issue.

A more productive way to handle these situations is to view them as an opportunity for the regulators and the regulated to come together for the purpose of understanding one another. The great majority of the time, facilities want to do what’s right but just don’t know how.

In the “real” world, facilities have to deal with so many regulatory agencies that compliance with one in particular can slip through the cracks. On the other hand, regulators may not always realize that they are only one in a long list of agencies that demand the attention of facilities for compliance.

While efforts are made by regulatory personnel to reach out to facilities in non-compliance, facility managers often find themselves giving their attention to the agency that poses the biggest threat to continued operations at that time. That’s how a non-compliance situation can get to the level of penalties or fines.

If a facility shows its willingness to get back into compliance, there is hope. Also, if the regulatory agency starts with the assumption that the facility did not intend to willfully violate the law, a collaborative and productive effort to right the situation can happen. Negotiation is possible for reduced settlement of fines when open and honest communication takes place.

Anyone that has worked in private industry knows that facility managers are usually caught up in the endless daily struggle for meeting their bottom line. The pressure to keep financially afloat can be great. Often times, regulatory compliance isn’t written in to the cost of doing business.

Additionally, planning standard operating procedures that include environmental compliance may not have taken place from the jump. But when a fine is issued from a regulator, it offers the opportunity to rework their business plan and adjust priorities by bringing the issue to the forefront.

One thing that we must come to realize is that we’re all playing on the same team. Industry brings us the products and services that we as citizens need to have a comfortable living and a strong economy, and regulators are there to ensure that the production of such goods and services is carried out in the most responsible manner that protects human health and the environment along the way.

If a regulatory fine brings people together to work as a team, the outcome can be a win-win situation for all parties involved. In the end, it can help provide the framework a regulated facility needs to ensure future compliance and growth for the business as a whole.

In my next article, I’ll talk about the true cost of doing business in an environmentally safe way, and how some facilities enjoy a short-term unfair competitive advantage due to circumventing the laws & rules covering environmental compliance.

Carlton Flowers
Carlton’s Industry List