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20–376 PDF 2016

S. Hrg. 114–325 

EXAMINING AGENCY DISCRETION IN 

SETTING AND ENFORCING REGULATORY FINES 

AND PENALTIES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY AFFAIRS AND FEDERAL 

MANAGEMENT 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

FEBRUARY 11, 2016 

Available via http://www.fdsys.gov 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

KEITH B. ASHDOWN, Staff Director 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

LAURA W. KILBRIDE, Chief Clerk 

BENJAMIN C. GRAZDA, Hearing Clerk 

SUBCOMMITTEE ON REGULATORY AFFAIRS AND FEDERAL 

MANAGEMENT 

JAMES LANKFORD, Oklahoma, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

MICHAEL B. ENZI, Wyoming 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

HEIDI HEITKAMP, North Dakota 

JON TESTER, Montana 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

JOHN CUADERESS, Staff Director 

ERIC BURSCH, Minority Staff Director 

RACHEL NITSCHE, Chief Clerk 
(III) 

C O N T E N T S 

Opening statement: Page 

Senator Lankford .............................................................................................. 1 

Senator Heitkamp ............................................................................................ 2 

Senator Peters .................................................................................................. 7 

Senator Portman .............................................................................................. 10 

Senator Ernst .................................................................................................... 12 

Prepared statement: 

Senator Heitkamp ............................................................................................ 27 

WITNESSES 

THURSDAY, FEBRUARY 11, 2016 

Jordan Barab, Deputy Assistant Secretary, Occupational Safety and Health 

Administration, U.S. Department of Labor ....................................................... 4 

Susan Shinkman, Director, Office of Civil Enforcement, Office of Enforcement 

and Compliance Assurance, U.S. Environmental Protection Agency .............. 6 

ALPHABETICAL LIST OF WITNESSES

Barab, Jordan: 

Testimony .......................................................................................................... 4 

Prepared statement .......................................................................................... 28 

Shinkman, Susan: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 39 

APPENDIX 

Responses to post-hearing questions for the Record: 

Mr. Barab .......................................................................................................... 45 

Ms. Shinkman ................................................................................................... 54 

(1) 

EXAMINING AGENCY DISCRETION IN SETTING 

AND ENFORCING REGULATORY FINES AND 

PENALTIES 

THURSDAY, FEBRUARY 11, 2016 

U.S. SENATE,

SUBCOMMITTEE ON REGULATORY,

AFFAIRS AND FEDERAL MANAGEMENT,

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 9:33 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. James Lankford, 

Chairman of the Subcommittee, presiding. 

Present: Senators Lankford, Portman, Ernst, Heitkamp, and Peters. 

OPENING STATEMENT OF SENATOR LANKFORD 

Senator LANKFORD. Good morning, everyone. I am glad that everyone is here for this Subcommittee hearing. 

The Subcommittee has held a series of hearings examining the 

regulatory process. We determined over the course of these hearings that a robust, efficient process will lead to better regulations 

and better regulatory outcomes. We have not had a lot of dissent 

on that. It is a matter of just working on the process. 

Today’s hearing focuses on the proper role of regulatory enforcement. It goes without saying that writing a law or developing a 

regulation is easier than actually enforcing it across the 50 States 

and our Territories in a fair, predictable, and consistent manner. 

But doing so is essential. Fair, predictable, consistent regulatory 

enforcement procedures must be understandable for all stakeholders. 

I believe that most Federal agencies agree that transparency is 

important and that providing accessible compliance assistance 

services is essential to any comprehensive enforcement regime. 

Safety, fairness, fighting discrimination are all great goals of our 

regulators and of enforcement. I think that is a reasonable thing. 

But, as we have learned from previous hearings, the sheer magnitude of the Code of Federal Regulations (CFR) means that understanding and complying with regulations is a gargantuan task for 

most individuals and businesses. The complexity of the regulatory 

system, coupled with the fear that failure to comply, even if complying is completely accidental, will result in a fine or penalty, that 
2 

means that a business will feel they are targeted for arbitrary violations that they do not fully understand. 

As a result, regulated parties often feel confused. They deal with 

conflicting compliance information and it leaves them vulnerable to 

the whims of any regulator. In fact, one small business owner from 

one of the States mentioned back to us that when faced with the 

overwhelming number of regulatory requirements, ‘‘what chance 

does a business have? ’’ 

Indeed, many individuals and businesses believe that agency officials enforce regulations in an unfair, unpredictable, and arbitrary 

manner. Because businesses often feel they are targeted arbitrarily, they are understandably fearful at times of Federal regulators. 

I hear stories from businesses that their only interaction with 

agency enforcement issues is to inspect and issue fines. As a result, 

my constituents tell me that their relationship with agencies have 

deteriorated and that instead of inspectors working with businesses 

to identify and solve compliance problems, government regulators 

show up, issue a fine and punishment. 

When businesses choose to avoid interaction with Federal agencies and dread inspections, our shared regulatory goals are not 

achieved and we have a breakdown between the government that 

is designed to serve people and the people that they serve. 

Agencies should play an active role in changing this culture. 

Agency officials, starting at the top, can set the tone by emphasizing compliance assistance, prevention through education, so that 

finable offenses, not to mention larger tragedies, do not occur in the 

first place. If businesses are no longer apprehensive in approaching 

an agency when they need clarification, they will likely find regulatory compliance easier and it will be more successful in compliance goals. In turn, all of us will enjoy safer workplaces and a 

cleaner environment. 

I look forward today to discussing our shared goals and feasible 

solutions. It is my hope we can start setting a tone in all of our 

agencies that helps engage with people and helps the people that 

are designed to serve the Nation and the people that we serve to 

actually have a better relationship in the days ahead. 

With that, I would recognize Ranking Member Senator Heitkamp 

for her opening remarks. 

OPENING STATEMENT OF SENATOR HEITKAMP 

Senator HEITKAMP. Thank you, Chairman Lankford, for holding 

this hearing today and, giving us all an opportunity to explore this 

topic in our regulatory process. 

I am interested in hearing from our witnesses today as we examine how regulatory enforcement is working on the ground to improve compliance as we identify ways in which Congress and the 

administration can work together to improve compliance with our 

regulations. 

For our Nation to be successful and safe, for our citizens to be 

able to work hard and provide for their families, we need a regulatory process that works for American business and American 

families. That means we need to have enforcement mechanisms to 

ensure everyone is playing by the same set of rules. 
3 

To that end, fines, penalties, restitution orders, and other sanctions are critical tools that the government has at its disposal to 

achieve compliance and deter wrongdoers from violating Federal 

laws and regulations. Without such tools, agencies have very little 

leverage in which to ensure the safety and health of our citizens 

and our environment. 

However, on the other side of the same coin, I believe that ensuring regulated agencies and entities have the necessary resources 

and information to successfully comply with regulations should also 

be our top priority. In fact, we have these mechanisms to ensure 

compliance and no one should feel like they are living in a ‘‘gotcha’’ 

world, where they are unaware of what the requirements are and 

only fearful that the sheriff will show up and slap a big fine on 

when they did not even know that they had an obligation to comply 

with a regulation. 

So, therefore, I am also interested in learning how your agencies 

focus their energy and resources on compliance assistance programs and ensure that entities are aware of what those requirements are. Specifically, I would like to know how both of your 

agencies work with small business to ensure that regulatory requirements are clear, transparent, and accessible. I know that both 

of your agencies work very closely with the Small Business Administration (SBA) and their office to ensure that small business concerns are appropriately addressed and quickly addressed. 

So, I look forward to hearing from both of you and hearing your 

insights as part of this all-important job that we have to do, which 

is to keep our citizens safe. 

Senator LANKFORD. At this time, we will proceed with testimony 

from our witnesses. 

Jordan Barab is the current Deputy Assistant Secretary of Labor 

at Occupational Safety and Health Administration (OSHA), a post 

he has held since April 2009. Prior to his current position, Mr. 

Barab served as Special Assistant to the Assistant Secretary of 

Labor for OSHA. Mr. Barab has also worked with the U.S. Chemical Safety and Hazard Investigation Board and for the House Education and Labor Committee. Thank you for being here, Mr. Barab. 

Susan Shinkman is the Director of the Office of Civil Enforcement (OCE) at the Environmental Protection Agency (EPA), a post 

that she has held since August 2012. Prior to this post, she served 

as the Chief Counsel to the Pennsylvania Department of Environmental Protection. She also served as Chief Counsel to Pennsylvania’s Inspector General (IG) and the Pennsylvania Department of 

Labor and Industry. Ms. Shinkman also served as Assistant United 

States Attorney in the U.S. Attorney’s Office for the Eastern District of Pennsylvania. 

I would like to thank you both for appearing here as witnesses. 

It is the tradition and custom of this Subcommittee to swear in all 

witnesses, so if you would please stand and raise your right hand. 

Do you swear that the testimony you will give before this Subcommittee will be the truth, the whole truth, and nothing but the 

truth, so help you, God? 

Mr. BARAB. I do. 

Ms. SHINKMAN. I do. 
4 

1The prepared statement of Mr. Barab appears in the Appendix on page 28. 

Senator LANKFORD. Thank you. You may be seated. Let the 

record reflect the witnesses have answered in the affirmative. 

We will use a timing system. You will see a countdown clock in 

front of you. We are not strict on time except that we have 10:30 

votes that are being called today, and so be very attentive to time 

to make sure that we get plenty of time for your testimony as well 

as the questions of those that are here at the dais today. Your written testimony will already be a part of the permanent record, so 

anything in your oral testimony that you would like to share beyond your written testimony is acceptable, whatever may be. 

Mr. Barab, typically, we go ladies first, but today, we are making 

an exception to be able to have you go first, if you are OK with 

that, and have you be able to kick off today. So, we will receive 

your testimony now. 

TESTIMONY OF JORDAN BARAB,1 DEPUTY ASSISTANT SECRETARY, OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION, U.S. DEPARTMENT OF LABOR 

Mr. BARAB. Thank you very much. Good morning, Chairman 

Lankford, Ranking Member Heitkamp, and distinguished Members 

of the Subcommittee. Thank you for inviting me here today. 

As Deputy Assistant Secretary of Labor for the Occupational 

Safety and Health Administration, I am honored to testify about 

the important work we are doing. As you know, OSHA’s mission is 

to ensure the safety and health of roughly 130 million workers. 

Over the last 45 years since OSHA was created, we have made dramatic progress in reducing work-related deaths and injuries, but 

there is still a great deal more to do. 

I would like to begin today by briefly discussing OSHA’s investigation and citation process. OSHA recognizes that most employers want to keep their employees safe, but there are still far too 

many employers who cut corners and fail to protect their employees. For these employers, avoiding OSHA penalties remains an effective incentive. 

Under the OSH Act, the Department is authorized to conduct inspections and issue penalties for health and safety hazards. The 

OSH Act also sets forth the types and amounts of potential penalties. For instance, OSHA penalties for willful or repeat violations 

have a maximum of $70,000 for each violation. Penalties for serious 

violations have a maximum of $7,000 per violation. Until recently, 

these figures have remained static. However, the 2015 bipartisan 

budget bill passed by Congress raised penalties and provided an 

opportunity for penalties to be indexed to inflation for the first 

time. 

The primary purpose of the penalties is deterrence. Any funds 

collected are deposited in the U.S. Treasury and are not used to 

support agency functions. 

OSHA carefully considers the impact of our penalties on small 

businesses. We take into account several factors. OSHA generally 

reduces penalties for small employers as well as those acting in 

good faith and employers with no recent citations. In fact, the average OSHA penalty for a serious violation is roughly $2,000. Sadly, 
5 

these penalties can often seem too low. This is particularly true for 

incidents involving worker fatalities, where the penalty is often 

only a few thousand dollars. 

Workplace inspections and investigations are conducted by 

OSHA compliance officers. They are trained safety and health professionals who are given strict procedures that they must follow. 

OSHA conducts two general types of inspections, programmed and 

unprogrammed. Programmed inspections account for roughly 46 

percent of inspections and specifically target the most dangerous 

workplaces and the most recalcitrant employers. Unprogrammed 

inspections account for 54 percent of inspections. They are initiated 

for several reasons, including worker complaints, referrals, employer reports, and followup inspections. 

OSHA’s primary goal is correcting hazards, not issuing citations 

or collecting penalties. As a result, when OSHA issues a citation, 

we always offer the employer an informal conference with the area 

director. The agency and the employer may work out a settlement 

agreement. Last year, 65 percent of inspections with a citation resulted in informal settlements. 

Alternatively, employers can formally contest the alleged violations and/or penalties. Last year, this happened in 7.4 percent of 

cases. These contests were sent to the Occupational Safety and 

Health Review Commission for independent review. 

At the same time, we recognize that most employers want to do 

the right thing and we are committed to ensuring that they have 

the tools and information they need. This is why we have made 

compliance assistance a priority. We work diligently to provide 

training, educational materials, and consultation services to employers and workers. New OSHA standards and enforcement initiatives are always accompanied by webpages, fact sheets, guidance 

documents, webinars, interactive training programs, and special 

products for small businesses. 

The cornerstone of this effort is our onsite consultation program 

for small and medium-sized businesses. Last year, close to 30,000 

employers took advantage of this free, high-quality service. A full 

87 percent of these visits were to businesses with fewer than 100 

employees. 

OSHA also continues its strong support for recognizing employers who make safety and health a priority. Through the Safety and 

Health Achievement Recognition Program (SHARP) and the Voluntary Protection Program (VPP), we recognize employers who 

have developed outstanding injury and illness prevention programs. SHARP and VPP employers demonstrate that safety pays. 

They serve as models for other businesses to follow. 

Another critical piece of our strategy effort is the Susan Harwood 

Training Grant Program. This program provides funding to nonprofit organizations for valuable training and technical assistance 

for vulnerable workers and workers in small businesses. 

OSHA also provides additional cooperative programs designed to 

encourage, assist, and recognize efforts to eliminate hazards and 

enhance workplace safety and health practices. For example, 

OSHA has an alliance with the National Service Transmission, Exploration, and Production Safety (STEPS) Network, along with the 

National Institute for Occupational Safety and Health (NIOSH), to 
6 

1The prepared statement of Ms. Shinkman appears in the Appendix on page 39. 

help employers reduce injuries and fatalities in the oil and gas industry. 

Thank you again for the opportunity to testify about the work we 

are doing every day to improve the safety and health of American 

workers and how we put great effort into making sure employers 

have all the necessary tools they need to meet their responsibilities. 

I would be pleased to answer any questions you may have. 

Senator LANKFORD. Thank you. Ms. Shinkman. 

TESTIMONY OF SUSAN SHINKMAN,1 DIRECTOR, OFFICE OF 

CIVIL ENFORCEMENT, OFFICE OF ENFORCEMENT AND COMPLIANCE ASSURANCE, U.S. ENVIRONMENTAL PROTECTION 

AGENCY 

Ms. SHINKMAN. Thank you, Mr. Chairman, Ranking Member 

Heitkamp, and Members of the Subcommittee. I am Susan 

Shinkman. I am the Director of the Office of Civil Enforcement, an 

office within EPA’s Office of Enforcement and Compliance Assurance. We are responsible for developing and prosecuting civil, administrative, and judicial cases and providing legal support for 

cases and investigations initiated by EPA regional offices. Thank 

you for the opportunity to testify about how EPA meets the challenge of ensuring consistent implementation and enforcement of 

Federal environmental laws and regulations. 

Our mission is to protect both human health and the environment by ensuring compliance with environmental laws. EPA regions support the national programs while working to ensure that 

EPA’s work complements State, Tribal, and local environmental 

priorities. 

To provide consistency across the regions and headquarters, the 

civil enforcement and compliance programs employ statute-specific 

policies to address compliance monitoring, enforcement responses 

to violations, and penalty assessments. 

EPA recognizes the role of small businesses in the Nation’s economy and has developed innovative compliance assistance tools to 

help the small business community understand and comply with 

environmental requirements. When a new rule implemented—impacting small entities EPA prepares Small Entity Compliance 

Guides, which explain the actions that a small entity must take to 

comply. When EPA conducts an inspection of a small business, we 

hand out information related to the rights of the small business. 

Under our small business compliance policy, EPA will eliminate or 

significantly reduce penalties for small businesses that discover 

violations and promptly disclose and correct them. 

In recognition of these efforts, the Small Business Administration has given EPA’s enforcement and compliance program as it affects small businesses an A rating for every year since 2005. 

One of the ways that EPA’s regional offices, together with their 

State, local, and Tribal partners, monitor compliance is through inspections of facilities. Inspectors record observations and identify 

areas of concern, and at the conclusion of the inspection, they will 

discuss their observations with the regulated entity. If followup is 
7 

needed, EPA will work with the regulated entity to remedy the violations. 

The vast majority of our enforcement cases are resolved through 

a settlement. Approximately 90 percent are handled administratively, while larger, more complex matters are usually handled as 

civil judicial cases in conjunction with the Department of Justice 

(DOJ). 

In addition to injunctive relief to ensure compliance, EPA does 

seek penalties to achieve deterrence and remove any significant 

economic benefit resulting from noncompliance. This levels the 

playing field by preventing companies that break the law from having an unfair competitive advantage. EPA’s penalty policies also 

provide for a reduction in penalty based on ability to pay. 

EPA has made tremendous progress toward achieving cleaner 

air, water, and land over the last four decades. We will continue 

to work with States, Tribes, and local governments to make smart 

choices about priorities, to take advantage of innovations, and to 

ensure that the most important work is done first. 

EPA’s enforcement program is designed to produce consistent 

and fair results that achieve compliance, cure noncompliance, deter 

future violations, and benefit human health and the environment. 

Thank you for the opportunity to testify and I would be happy 

to answer any questions. 

Senator LANKFORD. Thank you. Thank you both. 

The Chairman and Ranking Member are going to defer our questions toward the end and I would recognize Senator Peters for the 

first question. 

OPENING STATEMENT OF SENATOR PETERS 

Senator PETERS. Thank you, Mr. Chairman, and thank you for 

deferring. I do need to leave to speak on the floor, so I appreciate 

this opportunity. I will be on the floor talking about the situation 

we have in Flint, Michigan, and appreciate the opportunity to ask 

a question of Ms. Shinkman. 

Ms. Shinkman, on December 8, 2009, the EPA sent a memorandum to its regional administrators titled, ‘‘Proposed Revisions to 

Enforcement Response Policy for the Public Water System Supervision Program.’’ In this document, which is attributed to an Assistant Administrator in your office at the time, Cynthia Giles, the 

memo outlines a risk-based approach for enforcement of the Safe 

Drinking Water Act to target repeat violators by assigning points 

based on the number and severity of violations. Page six of this 

document outlines EPA’s enforcement response policy model for repeat violators. This policy states, and I quote, ‘‘Responses to violations should escalate in formality as the violation continues or occurs.’’ 

Additionally, I understand that in those States with primacy over 

enforcement, EPA is authorized after 30 days under the Safe 

Drinking Water Act to take certain actions to return a system to 

compliance. These authorities allow the EPA to issue administrative orders, impose fines, and pursue other civil and even criminal 

actions. The same EPA policy document explains that most enforcement actions are administrative in nature, but, I quote, ‘‘judicial 
8 

cases are also an important enforcement tool and the use of judicial 

authority is encouraged.’’ 

So, understanding your agency’s wide discretion in decisions of 

whether to levy fines against violators of our Nation’s environmental laws, in the case of the Safe Drinking Water Act, we have 

a document here that encourages the EPA to seek judicial remedies 

when formal enforcement actions are necessary, whether in the 

form of injunctive relief, civil penalties, or criminal action. 

With this in mind, I want to direct your attention, as I mentioned, to my home State, in the city of Flint, where we, as you 

know, have a very difficult situation, where there have been a series of bad decisions that now have subjected the entire city to toxic 

lead-tainted water. Nearly 2 years ago, an unelected emergency 

manager that was appointed by Governor Snyder changed Flint’s 

water source to the Flint River in order to save some money, and 

we know the result of that State decision has been catastrophic. 

The water crisis in Flint is an immense failure of Michigan State 

Government, certainly. The Michigan Department of Environmental Quality (MDEQ) has admitted they failed to properly follow 

the Federal lead and copper rule and that they chose not to ensure 

optimal corrosion control treatment was in place going forward. 

Your agency’s own emergency order invoked under authorities of 

the Safe Drinking Water Act on January 21 of this year states in 

its findings of fact, and I quote, ‘‘The presence of lead in the city 

water supply is principally due to the lack of corrosion control 

treatment after the water source was switched and the city of Flint 

MDEQ and the State have failed to take adequate measures to protect public health.’’ The emergency order also reserves EPA’s right 

to commence civil action and assess civil penalties in order to ensure compliance with this order. 

However, the same document explains that EPA Region 5 staff 

first expressed concern about the lack of corrosion control back in 

May. That means the emergency order was issued at a minimum 

of 7 months after the EPA’s concerns were first communicated to 

the State. 

So, if I am reading this law right, the EPA only has to wait 30 

days before it can pursue enforcement actions on its own separate 

from the State, and at the very least, the EPA needs to have some 

authority to tell the public directly about this health crisis. That 

is why I have introduced legislation to require the EPA to notify 

the public after 15 days if a State has not done so. The House 

passed similar legislation just yesterday. 

So, my question to you is fairly simple. If your agency’s own policy document encourages judicial action when a situation is escalating, why did the EPA wait so long to take action in Flint? 

Ms. SHINKMAN. Senator, I appreciate your question and certainly 

your concerns. This is a very tragic and catastrophic issue. The authority under the Safe Drinking Water Act is to give primacy to the 

States to try and do their enforcement and make sure that the Safe 

Drinking Water Act is properly administered. In this case, clearly, 

there was a falling down on the appropriate measures. The EPA 

Regional Office, Region 5, was monitoring what was going on with 

the State over a period of time. Obviously, a significant amount of 

time passed in which perhaps other action should have been taken. 
9 

My office became aware of it in the fall of last year. We worked 

with the region. We were monitoring what was going on. And, at 

the time we became aware of it, there were steps that were being 

taken. We monitored them as well as we could. When we realized 

that the situation required emergency action, we took the action on 

January 21 and issued that order. 

The order is very specific. It is issued to the State, the MDEQ, 

and the city of Flint. It has very specific requirements over a short 

period of time. We are monitoring that order on a daily, almost 

hourly, basis to make sure that we try to bring the city back into 

compliance and improve the drinking water in the city of Flint. 

We have taken that action. The most immediate need was to do 

emergency action. If that does not work, we will obviously be following through with other enforcement actions, potentially judicial. 

Senator PETERS. Well, and I know my time has expired, but I realize that you have taken action and have been much more focused 

on the Flint situation now, which I appreciate. But, why did that 

not happen months ago? As you know, every month that goes by 

with tainted water and children, in particular, who are consuming 

water with lead that creates irreparable damage to their brains, 

why was this not treated as a crisis immediately? 

Ms. SHINKMAN. I cannot answer for everyone who was involved 

in it. I can say from my office, as we became more aware of it, we 

moved and we took the most appropriate action we could in January. Other people’s actions earlier, I cannot account for all of them. 

I recognize the fact that it is a very important issue. It is certainly 

being looked into by a lot of people. 

Senator PETERS. So, what do we need to do going forward? How 

can we prevent this from ever happening again? What sort of actions do we need to take, or is there anything that we need to be 

doing working with you at the EPA? 

Ms. SHINKMAN. From the EPA’s standpoint, we are very aware 

of what happened. We are going to try and make sure it does not 

happen again. We are looking back at what happened here, and 

looking forward, we are scouring to make sure that something like 

that does not ever happen again. The authority is there. The emergency existed. We issued the emergency order. In a similar case, 

we would certainly issue a similar emergency order as soon as we 

could. 

Senator PETERS. Well, and I understand that there was some 

confusion within the EPA as to whether or not they should go public or whether or not you should go public with some of the tests 

that were coming forward, that is why I have introduced legislation 

with Senator Stabenow to require immediate public disclosure if a 

State does not take action, if a State is not making these tests 

available to the public that show elevated levels of lead or other 

toxins. I believe the House bill has even a quicker timeline of 24 

hours that you have to report. Our bill has 15 days. 

But, we need to be very clear that if the EPA sees something, 

that you go public. There should be no ambiguity about that. It 

should be clear cut, straightforward, that the public has a right to 

know. Certainly, the State of Michigan bears primary responsibility 

for this crisis. There is no question about that. They need to step 

up. They broke it. They need to fix it. But, certainly, I am ex-
10 

tremely disappointed with the EPA’s response on this, as are so 

many people, and I think we can never tolerate the EPA not going 

public immediately when you have a building crisis of this magnitude. 

So, I will continue to work with you and your office and I look 

forward to working closely so that we can do whatever it takes to 

make sure that this never, ever happens again. 

Thank you. 

Senator LANKFORD. Senator Portman. 

OPENING STATEMENT OF SENATOR PORTMAN 

Senator PORTMAN. Thank you, Mr. Chairman, and let me just 

start by saying, with regard to Senator Peter’s comments on water 

quality, we are working with the EPA on some issues in my State 

of Ohio. I do not know if you know Bob Kaplan, your Assistant Administrator, but I have spoken to him directly about some of these 

same issues. In our case, it is a small community called Sebring, 

Ohio, and the mayor, Mayor Pinkerton, and I have talked on occasion about, over the last 2 or 3 weeks, about EPA’s role. We want 

to be sure EPA is providing the technical expertise and providing 

the kind of oversight that they are required to, but also providing 

transparency. 

So, I would ask you today, Ms. Shinkman, because you are here 

and because this topic is timely, if you could please ensure that, 

in fact, we are not having another case where the EPA is not providing the right kind of information to the people who are depending on the water supply. We think things are under control in 

Sebring right now, but in my conversations with Mr. Kaplan, I 

made it clear that we expect EPA to do its job and to provide the 

transparency to the people of that community. 

Ms. SHINKMAN. I appreciate that, Senator. I am aware of the situation. I believe EPA is directly involved at this point and will continue to monitor it. 

Senator PORTMAN. And, I want to thank the Chairman and 

Ranking Member for holding this hearing. We once again are seeing this Subcommittee do good work, and this is a Subcommittee 

to look at regulations and, therefore, the regulatory process including regulatory fines and penalties. They roll up their sleeves and 

jump into this, the Chairman and Ranking Member, and I really 

appreciate that, because I think there is increasing power in the 

regulatory system that has not had the proper oversight and this 

is one area. 

If you are a small business person, it is intimidating. You do not 

have the compliance people to figure out what all these potential 

regulatory issues are, much less what the fines and penalties might 

be, and if there is not a consistency in terms of the application and 

transparency in terms of what the rules are, it makes it very difficult, one, to comply, and two, again, just intimidation of not being 

able to figure out what the rules are. 

Mr. Barab, I did not get to hear your whole testimony, but I got 

to read some of it just now, and I appreciate your being here today 

and talking about what OSHA is doing to try to make it easier for 

people to understand, particularly small businesses, what the rules 
11 

are. You have a thousand inspectors out there, is that right? I saw 

that in your testimony. 

Mr. BARAB. Yes, a thousand in the Federal level and probably 

another 1,100—— 

Senator PORTMAN. At the State level? 

Mr. BARAB [continuing]. Among the 28 State plans. 

Senator PORTMAN. Yes. So, you have 2,100 people, at least, but 

a thousand at the Federal level. That is a lot of people, and if you 

have the kind of flexibility I saw in your testimony and you have 

different applications depending on the situation, how do you have 

consistency, and what are you doing to ensure that there is a consistent application across the agency, understanding that flexibility 

is something you also want, because in some instances, that flexibility can be very helpful to a small business, to work more as a 

partner with them to resolve issues rather than an enforcement 

measure to punish them for something that they did not have the 

expertise to handle. So, talk about that. 

Mr. BARAB. Yes. Thanks for the question. It is a good question, 

because that is one of our major challenges always, ensuring consistency among our inspectors around the country. 

We do train our inspectors very carefully when they first come 

on and continuously thereafter to ensure that they are complying 

with the procedures. We have what is known as our Field Operations Manual, which is a notebook about this size which contains 

all the procedures, all the enforcement procedures, the penalty procedures, the appeal procedures, everything that an inspector needs 

to make sure that they are doing their job, again, with that consistency, with the transparency that we value. 

We monitor that. I mean, we have a whole staff in Washington 

making sure that our inspectors do follow those procedures. We 

work very closely with our solicitors, again, when we run into difficult problems, again, to ensure that kind of consistency. 

Now, we also do, as you mentioned, have some flexibility there, 

and I think that is a good thing, because we are dealing with many 

employers who have a right to, and we listen to their defenses 

when that happens. We have a process where we have informal 

conferences after we issue the citations in order to discuss the 

problems that we found and to talk about possibly reducing fines 

or changing the citations. So, I think we do try to balance those 

procedures with some flexibility. 

Senator PORTMAN. Thank you. I appreciate that. And, again, 

your testimony was helpful in that regard and this Subcommittee 

is going to be looking at ways to increase that transparency and 

to let people know what the issues are that they have to address, 

but also, how the fines and penalties work. 

And, Ms. Shinkman, my time has now expired, but I assume that 

you are going to answer this further, how the EPA could increase 

the transparency in terms of letting people know what is going on. 

I am going to turn it back to the Chairman and Ranking Member, 

but I look forward to hearing what your response is to that. 

Senator LANKFORD. Ms. Shinkman, if you want to go ahead and 

answer that, you are certainly welcome to. 

Ms. SHINKMAN. Thank you. Yes, we are very concerned about 

those issues, as well—consistency, transparency, and flexibility in 
12 

all of our penalty policies and our regulatory actions. For transparency, we have all of our policies on the web. They are available 

for anyone and you can see them by statute or by program area. 

Any of our proposed settlement agreements are open for public 

comment. 

For consistency, we have actually a specific policy for each statute that are applicable across all ten regions and headquarters so 

we all have the same standards to apply. We have training for our 

inspectors that is also done across the ten regions and with headquarters. 

We are also very concerned about flexibility, because we face big 

industries and small businesses, and so we have built into all of 

our policies many standards that we can look to to make sure that 

we are applying them flexibly. For example, we look at the compliance history of the entity. We certainly look at the size of the entity. That is a big issue for us because of the disparities that we see. 

We look at the good faith efforts to comply as opposed to willfulness of noncompliance. We look at the duration of any violation. 

And we also look at the seriousness of it. 

And, finally, in any penalty situation, we look at the ability of 

the violator to pay so that we can be addressing that realistically 

before we settle on any final penalty. 

Senator PORTMAN. Thank you, Mr. Chairman. 

Senator PORTMAN. Senator Ernst. 

OPENING STATEMENT OF SENATOR ERNST 

Senator ERNST. Thank you, Mr. Chairman, and thank you both 

for your testimony today. 

Ms. Shinkman, we do not have to look any further than a lot of 

headlines out there today to see that the American public does not 

have a lot of faith nor trust in our government and government officials. That is quite evident with what we see going on in the primaries, the caucuses, and, of course, what we see with a number 

of agencies across the Federal Government. Could you please tell 

me the last time that Administrator McCarthy reviewed the procedures of the onsite inspectors. 

Ms. SHINKMAN. I am sorry, I cannot answer that. I will be happy 

to get back to you and look into that. 

Senator ERNST. If you would, please. 

Ms. SHINKMAN. Sure. 

Senator ERNST. And, do you know, has she ever participated in 

an inspection from start to finish to better understand what our 

small businesses must do to comply with their inspections? 

Ms. SHINKMAN. I will certainly look into that. 

Senator ERNST. OK. And, my point of this is that there are a lot 

of bureaucrats out there that will simply throw out rules and regulations without understanding the full impact from start to finish, 

both the labor intensity in any of these rules and regulations or the 

cost to the businesses. I think it is disregarded so many times. 

So, I would like to see leaders leading from the front and understanding what they are instructing our civilian population, our 

companies, our small businesses, to comply with. It is easy to sit 

in an office and push out rules and regulations, but we need leaders that are willing to go on the ground and actually walk through 
13 

these situations with those business owners so they get it. Our 

American public feels that our bureaucrats do not get it. They have 

lost touch with what is going on out in the communities. 

As you know, EPA’s Waters Rule is very concerning to many in 

my State, as well as many others out there, and I want to take a 

minute to get some clarity on the interim Clean Water Act settlement penalty policy, and I am going to quote here. It says that, ‘‘it 

sets forth how the agency generally expects to exercise its enforcement discretion in deciding on an appropriate enforcement response and determining an appropriate settlement penalty.’’ 

And then I am going to walk you through the formula on how 

to calculate a penalty. Again, ‘‘The settlement penalty is calculated 

based on this formula. Penalty equals economic benefit plus gravity, plus or minus gravity adjustment factors, minus litigation considerations, minus ability to pay, minus supplemental environmental projects.’’ 

My concern that I hope that you can address is that it seems you 

all have a tremendous amount of discretion when it comes to enforcing a penalty, that is No. 1. And, to be honest, I have never 

seen a formula with so many variables here. And not only do we 

have so many variables, it is EPA that decides what the gravity is, 

what the economic benefit is, what that litigation consideration is, 

and you also decide what the business’s ability to pay is. 

This is very confusing, and how is this approach assisting business owners into compliance? It seems like we have the EPA 

against our businesses, and can you explain this policy. 

Ms. SHINKMAN. Thank you, Senator. I will attempt? 

Senator ERNST. Very frustrating. 

Ms. SHINKMAN. Well, I appreciate that, and those of us who work 

with it every day perhaps get a little more familiar with it and perhaps lose sight of how it might look to someone for the first time 

or the second time. So, maybe we need to look at our language a 

little bit better. But, I can explain a couple of those elements to 

you—— 

Senator ERNST. Please. 

Ms. SHINKMAN [continuing]. In a way that I hope will be helpful. 

Starting from the back, the ability to pay, the only way EPA determines or makes any finding about ability to pay is based on 

what the violator submits. If we have a penalty amount that seems 

to be appropriate, and I will get to how that is derived in a minute, 

but if the entity says that they do not think they can pay, we ask 

them to explain that and give us some information about why, and 

we look into realistically whether that is true, based on tax returns 

or other economic financial statements that a business might provide. 

So, the EPA does not pick out from the air what the ability to 

pay is. We work with the information that is provided by the entity, and we give that opportunity to provide statements about pay, 

and very often it leads to a reduction in the penalty. So, that is 

how that determination is made toward the end. 

The economic benefit is a way of finding out whether a company 

that, if not in compliance, benefited by not having to, say, pay for 

controls that all of their competitors had to pay for. If there is some 

kind of equipment that costs maybe $10,000 a year to operate and 
14 

the entity that was in noncompliance did not install it but all of 

their competitors did, they received an economic benefit of $10,000 

every year that they operated without that control. So, that would 

be an economic benefit that would be part of the penalty calculation. 

Senator ERNST. But, all of this is decided by the EPA, correct? 

Ms. SHINKMAN. In discussions with the company. We would not 

have the information without talking to the company. But, we 

would ask, if we saw that they did not have the control, we would 

talk perhaps to the competitors, perhaps we would know what that 

control cost, and if it was not there, it is an iterative process, coming up with a penalty. Those are two elements that are distinct 

that you mentioned. That is how the ability to pay works. That is 

how the economic benefit works. 

And then the other considerations that some, I think, were listed 

as part of what we call the gravity component, that is where the 

willfulness as opposed to the unknowingness comes in, and the 

length of the violation—if it was a spill, whether it went on for a 

month or a day, what the harm was from it. Those are the kinds 

of considerations that come in, and sometimes in a matrix way that 

we work with the company on to try to determine what the appropriate penalty is. 

And, we resolve most of our cases through settlements by having 

this discussion. And, rather than just having a free-wheeling, what 

do you think is appropriate, we set out these guidelines. The economic benefit is one and then the gravity component is built—consists of these other considerations, like damage, length of time, the 

prior history of the violator. 

Senator ERNST. OK. And, I know I am going way over. I am 

going to make one final point, because we have cases like Senator 

Peters was just discussing with the Flint water situation, where 

the EPA did know something. We do not know the full extent of 

this, but the EPA knew. We have a mine spill that affected a river. 

Who decides if the EPA is at fault and how much they should be 

fined for incidents like this? 

And, I know you cannot answer that. That is just one of those 

questions out there that, it seems like the EPA has got so much 

power and control over so many situations. You try and gain more 

control through expanded definition of Waters of the United States, 

but you cannot honestly manage what you already have under your 

belt. 

So, I am going to stop right there, but I appreciate the extra 

time. Thank you very much. 

Senator LANKFORD. Senator Heitkamp. 

Senator HEITKAMP. Thank you, Mr. Chairman. 

As someone who once upon a time, when I was tax commissioner, 

had to write a penalty policy, I sympathize, because frequently, if 

you just leave it up to discretion without any kind of policy, what 

you get is the squeaky wheel gets the grease and everybody else 

who is in exactly the same situation is not treated fairly, if they 

say, well, I did it, so I am going to pay the penalty. We need to 

make sure that that does not happen, and so I would just suggest 

to you that people can be bitter if they find out, boy, I did not get 
15 

my penalty waived or reduced, but he did simply because he asked. 

And, so, I just set that out as one of the concerns. 

But, my main reason for wanting to have this hearing and for 

how I look at this is penalties should be last resort. That should 

be the very end of enforcement. That should be the end of regulation. That should be reserved for those people who do not get it, 

who have done something that is, in my opinion, fairly blatant, 

knowing that they have not been in compliance with the regulation. 

I was intrigued by the stakeholder discussions, because I think 

compliance is why we have penalties, and you should all want, as 

agency heads, to walk in and never assess a penalty. It means that 

you are doing your work on the front end in terms of compliance. 

And, so, I was interested in the work that OSHA does with 

stakeholders that you discussed in your testimony. Can you elaborate how you reach out to safety organizations and how you collaborate with manufacturers and stakeholder groups. 

Mr. BARAB. Yes. We have a number of means of doing that. First 

of all, we have a fairly large part of our budget that goes to compliance assistance. I think it is this year about $68 million. 

Senator HEITKAMP. What percentage is that? 

Mr. BARAB. Well, it is a little over 10 percent, probably 12 percent—— 

Senator HEITKAMP. You may want to up that a little bit. 

Mr. BARAB. Well, it has actually been cut back since—that is one 

of our budget items that has never really recovered from sequestration, which is rather upsetting, because what that money does 

largely is go to paying for what we call compliance assistance specialists, which we at one time had one in each one of our 85 area 

offices. Now, we are not able to quite afford that anymore. And, 

what these compliance assistance specialists do is they work with 

businesses to make sure that they are aware of their obligations 

under the law, that they are aware of best practices, that they are 

aware of basically how to keep their workplaces safe. 

Senator HEITKAMP. North Dakota has a workforce safety program that is State run, and I think it might be one of the—it used 

to be everybody had State-run systems and now we have 

transitioned. Can you talk about how you work with the Statebased systems? Could you not expand your outreach in terms of 

workforce safety by working with the insurance agencies? 

Mr. BARAB. Yes, and we do try to work with everyone, not only 

with private sector stakeholders, but with the States. Now, North 

Dakota is not one of the States that has its own health and safety 

program, so we are directly responsible for enforcement of health 

and safety, workplace health and safety. 

Senator HEITKAMP. And you have two inspectors in North Dakota. 

Mr. BARAB. Yes. We are trying to up that. 

Senator HEITKAMP. Yes. 

Mr. BARAB. We know there is a major problem there. We are actually opening an office—and right now, we actually have an office 

that covers South Dakota and North Dakota. We are opening up 

a new office in South Dakota so that we can put more resources 

into North Dakota, because we realize, given the oil boom there, 
16 

there is a major demand, and, the incidents and injuries and illnesses and fatalities that have come along with that. So, we do try 

to work very carefully with the States where they have those resources, again, as well as with the private sector in all States. 

Senator HEITKAMP. When I served on the board of directors of a 

large chemical—that is what is was—gasification plant, I mean, we 

had a safety report before we did anything else, and I think the 

industry is very interested in workforce safety. It is expensive not 

to be focused on workforce safety. And, a lot of the programs like 

the ones that are run by the State of North Dakota encourage compliance and, so, I am trying to basically say, let us not get out there 

with a ‘‘gotcha.’’ Let us get out there and invest a lot of resources 

in meeting kind of compliance on the front end. 

The other thing that will be a bonus as a result of that is you 

will begin to understand how some of your regulations are perceived and that they do not add value to safety and the workforce. 

Those are regulations that have been written in Washington, D.C., 

that, as Senator Ernst talked about, when they are applied, do not 

necessarily achieve a result that in any way adds value to workforce safety. 

And, so, I just really think 10 percent of the compliance budget, 

or enforcement budget, going to educating and getting people into 

compliance is an inadequate balance. 

I am kind of running out of time, but I would like to know what 

that split is at EPA. 

Ms. SHINKMAN. I do not know offhand what it is. We could certainly get that information for you. We do have compliance programs, particularly for small businesses and for agriculture—— 

Senator HEITKAMP. Why do you think everybody is so afraid of 

EPA? No, I mean, I think, you sit here, and I think sometimes EPA 

feels under siege, but we hear it when we are there. We hear the 

concerns. We hear the fear. That is not exaggerated and it is not 

an over-focus of ours. So, what is it about your agency that strikes 

the fear in the heart of the people you regulate? 

Ms. SHINKMAN. I do not think I can answer that directly. I appreciate—— 

Senator HEITKAMP. I am just making my point. You do not need 

to try and answer that question. But, I think it is a legitimate 

point and I think it should cause some soul searching within your 

agency on why that is and how you can do a better job working 

with those people. 

You can only look at what happened in Flint and realize how 

critically important it is, what you do. I mean, and that you do 

what you do well. Flint is a reminder to all of us that we need 

these agencies. But the question becomes, how do we prevent this 

from happening, as Senator Peters talked about, but also, how do 

we develop a better relationship long-term. 

Mr. BARAB. Senator, if I could correct one thing I said, I mentioned our $68 million for compliance assistance. 

Senator HEITKAMP. Yes. 

Mr. BARAB. That is our Federal compliance assistance budget for 

the services that I mentioned. We also have what I mentioned in 

my testimony—— 

Senator HEITKAMP. Right, the State—— 
17 

Mr. BARAB [continuing]. Which is our consultation budget, which goes totally to small employers, and that is about $50—I think it 

was $57 million, so that is added to the $68 million that I mentioned before. 

Senator HEITKAMP. I will followup with some questions. 

Mr. BARAB. OK. 

Senator HEITKAMP. And, I am interested in what your plans are 

for the Dakotas, so—— 

Mr. BARAB. Sure. 

Senator LANKFORD. Let me just give you a couple quotes. As we 

asked the question, and we let people know that we had this hearing and were trying to gather information and background sources, 

and I have several stories and things that I can share on it, let me 

just pull a couple quotes here, just about the fines and the mindset 

of when inspectors come. 

One person told us that they were told that when an inspector 

came, they said to them, ‘‘if it takes all day, we will stay until we 

find a violation’’. 

One person said, ‘‘the EPA views businesses as an ATM to be 

fined, regardless of the determinations of an investigation’’. 

Another one said, ‘‘the determination of whether there is a fine 

and the amount depended on the mood of the investigator’’. 

Said this one, ‘‘there has been a culture change from one of compliance assistance to one of scaring people into compliance’’. 

And then this one, ‘‘more stick than carrot’’. I thought it was interesting. 

Now, I would tell you, just interacting with the two of you and 

hearing your mindset and your view on this, I think if most business folks were sitting across the table from you and talking back 

and forth, they could work a lot of things out. But, there is a real 

sense, and what Senator Heitkamp had mentioned before, I have 

heard from numerous employers saying, if I went back—and people 

that own small businesses—if I went back 10 years ago, when 

someone showed up for an inspection, they were extremely helpful 

to me and they were helping me find safety issues. Now, they show 

up and they are just a fine. 

And something seems to have shifted, and now it has gone from 

‘‘I am grateful to have the help to walk around the facility with 

fresh eyes,’’ to, ‘‘oh no, they are coming. I am going to have to pay 

a fine for something, no matter what it is’’. So, I do not know if 

you could say what has occurred, but that real life sense is out 

there, and so this perception that for many is reality, of I do not 

want an inspector to come help me to find safety violations because 

I know I am going to have a fine. Even if it costs them all day to 

stay here, they are going to find something. 

Some of this goes back to the training you all talked about before. I know EPA had the wonderful experience of several years ago 

having someone in Region 6 say, ‘‘the way we do this is like the 

Turks used to do it, to go into town and grab five guys and crucify 

them. Then there are no problems after that’’. Obviously, that is 

not the EPA’s attitude as a whole. And, when you talk about trying 

to train people in regions and making sure it is consistent, that 

comes to mind immediately when you think there was a region that 

was most certainly not consistent with the EPA national value. 
18 

I am actually going to get to one—my question is, how do you 

balance out the issue of compliance and the real deterrence that a 

fine is and being helpful to someone in being able to walk through? 

We want any business to have a fresh set of eyes to look around 

for health and safety issues. We do not want them to be able to 

push us away. How are we currently trying to balance that out to 

reengage with business, to say, we want to be able to help in the 

process? And, I will have just both of you mention that. 

Ms. SHINKMAN. Thank you. First, I would like to address the disconnect that you have described. Clearly, that is what it is, I hope. 

Certainly, from EPA’s perspective, we really believe in our mission 

to reduce pollution and protect the health of the communities that 

we all serve. That really is the mission. That is how we feel about 

it. I understand that there is a perception out there as you have 

well described. And, so, we need to work at getting around that disconnect. 

I believe there are a couple ways that we have tried. We do have 

compliance assistance available for small businesses. We have tried 

to improve on that and making it available. 

We have also focused on some of our penalty and enforcement 

methods to look at ways to deal with small entities, with small violations. We have expanded our—we call them Expedited Settlement Agreements (ESA). These are ways that we can, when there 

is a small violation seen in the field, we can address it rather 

quickly. We use this for things like underground storage tanks 

where there might be a leak, some recordkeeping in some of our 

chemical violations, things that we see that are small, can be remedied quickly. We try to have what is really a non-negotiable agreement. It is small. These are the facts. We can all agree to them 

quickly. And we have tried to expand our use of those so that when 

there is a small violation that can be dealt with quickly, we can 

use that. 

Senator LANKFORD. Can you walk me through the settlement 

process? And this will be one, Mr. Barab, I want to get a chance 

to visit with you, as well. You both mentioned the settlement. 

There is a very clear process, and as Senator Ernst had mentioned 

before, I get it as far as the benefit and the cost and the risk and 

all those things. I get the process and going into that. 

Ms. SHINKMAN. Sure. 

Senator LANKFORD. The challenge is, once you go through that, 

you set a fine and then there is a process to have a conversation 

on the settlement. Here is the fine. Now, let us talk about if we 

are going to settle on it. How does that part of the process work? 

What is the mechanics of that? 

Ms. SHINKMAN. OK. Let me start maybe a little earlier. It really 

is an incremental process. An inspector goes out and sees that 

there is a problem. 

Senator LANKFORD. Right. 

Ms. SHINKMAN. Unless it is an emergency that needs to be addressed immediately, there is usually a discussion about it and 

then they come back to the office and discuss what, if anything, 

needs to be done about it from an enforcement perspective. 

After that determination is—if there is a violation that actually 

merits taking enforcement action, then there is a discussion about 
19 

what level of enforcement to take. Is this something that can be 

dealt with administratively by going back and talking about it and 

seeing whether it is a small, quick resolution or whether it is something that is going to require changes at the facility that would require some investment and some monitoring. An awful lot of them 

do not, but if they do, there is a further discussion about that. 

Senator LANKFORD. Can I ask you a quick question on that? 

When you find a violation, does that warrant a fine every time? 

Ms. SHINKMAN. It depends—— 

Senator LANKFORD. As far as, do you feel an obligation coming 

at you either legislatively or from a guidance that if there is a violation, that is a fine? 

Ms. SHINKMAN. We have enforcement discretion and we can—— 

Senator LANKFORD. OK. Mr. Barab, do you all have enforcement 

discretion, as well? Do you feel that—— 

Mr. BARAB. I would say, generally, we are required to issue a 

fine of some sort when we find a violation. 

Senator LANKFORD. Every time. 

Mr. BARAB. There is some discretion there, but, yes, that is 

the—— 

Senator LANKFORD. OK. I want to talk about that. I hate to interrupt you, but I wanted to get some clarity on that to make sure 

we are heading in the same direction. Go ahead and you can finish, 

Ms. Shinkman. 

Ms. SHINKMAN. So, there is enforcement discretion. We decide 

whether it is something that within our policies merits further action. That further action may be an administrative order or an 

agreement that we talk about, we reach agreement that the first 

thing we want to do is abate whatever the problem is. 

Senator LANKFORD. Right. 

Ms. SHINKMAN. And, so, that is what is addressed first, whether 

it is going to require additional action, stopping something, starting 

something, try to resolve it that way. If we reach that resolution, 

in most cases, there will be at least some penalty because there 

was noncompliance, and then we go through the factors to decide 

how large the penalty is. 

In a bigger case, what would happen, generally, is there would 

be further discussions and there may even be a referral to the Department of Justice, and then there are further discussions within 

EPA, with the Department of Justice, and with the entity that is 

out of compliance. So, it is an incremental process, an iterative. 

I think a lot of the things that you are hearing about tend to be 

the small ones. But, the reality is, there is usually a process and 

there is a lot of dialogue back and forth before there is an ultimate 

resolution about what injunctive relief or change needs to be made 

in the processes to make sure that the company is in compliance 

going forward, what mitigation needs to be done for any damage 

that might have—like a spill or something like that that needs to 

be cleaned up, and then, what penalty do we need under the standards that we have. 

Senator LANKFORD. We are still back to the settlement thing. 

The process, how to get there. Once the fine has been—the settlement that you are describing, is that typically a judicial settle-
20 

ment? We are in a court and we are trying to work through that? 

Or—— 

Ms. SHINKMAN. It could be both. 

Senator LANKFORD [continuing]. What is the other settlement? 

Ms. SHINKMAN. The other is administrative, in which case we 

would have either an order that is appealable or a signed agreement, and that goes through our administrative process to the Environmental Appeals Board. 

Senator LANKFORD. And that is a more fluid conversation that is 

happening—— 

Ms. SHINKMAN. Yes, it is. 

Senator LANKFORD [continuing]. Across the table. We agree on 

the facts, now, what is a reasonable fine, and you are discussing 

that process. 

Ms. SHINKMAN. We certainly try to reach agreement on all of 

those. Obviously, we do not always. 

Senator LANKFORD. Mr. Barab, is the settlement process pretty 

similar for you all? Again, I understand once you get to the spot 

of a fine, an assignment, you had mentioned very well about the 

exact numbers and the changes that have happened in the Budget 

Act and such from there. But, I am talking about the settlement 

process at the end. 

Mr. BARAB. Yes. Our process is slightly different than EPA’s. 

Once we finish the inspection, the inspector then goes back to the 

office. The area director actually has authority over what the penalty will be, assuming any kind of violations have been found. 

At that point, the employer has 15 days to contest the citation, 

if the employer wants to do that. During that 15-day period, there 

is a chance, and we strongly encourage employers to engage in 

what we call our informal settlement process. So, the employer 

comes into the office, the area office, and sits down with our area 

director and they try to work out some kind of settlement, if possible. And, again, looking at the violations there were, looking at 

the employer’s defenses, looking at the abatement period. All of 

those things are discussed during that informal period. And, again, 

in about two-thirds of the cases that we have, we do reach some 

kind of settlement at that point with the employer. 

Now, if no settlement is reached, then within that 15-day period, 

the employer can contest, legally contest, the citation. That then 

goes to the Occupational Safety and Health Review Commission. 

There are Administrative Law Judges (ALJ) that decide that, and 

that case then moves up that ladder. 

Senator LANKFORD. OK. Let me ask the question about the flexibility that you have or do not have on fines. Is it a guidance or is 

it statutory that if you see a violation, there has to be a fine? 

Mr. BARAB. That is statutory, and our maximum penalties are 

set also by law. 

Senator LANKFORD. OK—— 

Mr. BARAB. But we are also—— 

Senator LANKFORD [continuing]. But as far as a minimum penalty, that is statutory that it requires—— 

Mr. BARAB. The only place there is a minimum penalty is with willful violations, and that is a $5,000 minimum, $70,000 maximum. As I mentioned, there are also—by statute, we also have to 
21 

consider, as EPA does, size, history, and good faith. So, there are 

almost always reductions there. 

Senator LANKFORD. So, at the end of this, as you all both mentioned that the goal of the penalty is always deterrence, and I get 

that. But, the goal of the regulation and of the statute is usually 

health and safety and environmental protection and such, and the 

fine, the penalty here, becomes a vehicle to help accomplish some 

of that. But, I do not know of anyone that has written a statute 

to make sure that we fine some entity, as well. That is the worst 

case scenario for us. 

I give you the easy example we have all experienced. My daughter when she was in high school was pulled over by a police officer 

because her dad, me, was not helping her watch for things like a 

headlight that was out. Now, she is also a teenager and she can 

watch for that herself, but as the dad and the 16-year-old gets 

pulled over with a headlight out, she was given a warning by the 

police officer and said, ‘‘hey, did you know? ’’ She said, ‘‘I did not 

know, did not catch it.’’ He gave her a warning. 

We got back home and spent $125 rearranging the front of her 

car to do a new headlight. Joy, OK. She got a warning. We fixed 

it. The health and safety issue of getting both headlights working 

was accomplished. 

What I am trying to figure out is, how much flexibility do your 

compliance folks have to be able to walk in and say, you know 

what? That trash can is in the wrong spot, and someone to say, I 

did not realize. When I walk through manufacturing locations, as 

you all do all the time, as well, on the wall somewhere, there is 

a library of four-inch plastic binders that are sitting up there with 

all the regs and all the requirements and most of the people that 

run the manufacturing locations live in dread that they have 

missed a page somewhere from those six four-inch binders that are 

up there on the wall somewhere trying to make sure that they miss 

it. 

How much flexibility do you feel like you have to be able to help 

people, to say, you missed one, and it is not necessarily a fine, and 

it is not necessarily, a leak that is going to damage a lot of folks 

or was not necessarily health and safety, but they missed one. 

Mr. BARAB. There are certainly small things that we correct as 

we walk around, or ask the employers to correct. There is no doubt 

about that. But, again, our concern is saving lives, and—— 

Senator LANKFORD. Sure. 

Mr. BARAB [continuing]. Our serious violation, which is only the 

maximum of $7,000, there is a requirement the way a serious violation is defined in that it has to be likely to cause death or serious 

physical harm. So, those are, again, fairly serious, as the term is, 

when we find those, and—— 

Senator LANKFORD. I have no issue with that. I am talking about 

minor fines. 

Mr. BARAB. Yes. 

Senator LANKFORD. One of my manufacturers was fined because 

he had a shelf in his workspace for one of his workers that was six 

inches too low. Now, I do not know all the story on that, but I stood 

on the floor with him and I said, ‘‘that shelf right there? ’’ And he 
22 

said, ‘‘Yes, that shelf right there, we had to raise by six inches and 

we got a fine for it.’’ 

Mr. BARAB. Yes. I mean, we hear stories like that, and generally, 

when we look into them, usually, there is something else accompanying that with it that is of a more serious nature. But, when 

we have situations like that, we are always happy to look into 

them, but it sounds unlikely that there would be any kind of 

fines—— 

Senator HEITKAMP. But, I think what we are asking is, let us say 

you see an extension cord that is located in a location where somebody could trip. That is obviously a hazard. You note it. Are you 

telling me, because that is a violation, you have to assess a fine? 

Mr. BARAB. We also have various means. We have other than serious fines, where they can be very low. We have a quick fix, where 

we can—if the employer fixes it right away, we can either minimize 

or, in some cases, eliminate the fine, so—— 

Senator HEITKAMP. Yes, right there. Stop. 

Mr. BARAB [continuing]. OK. 

Senator HEITKAMP. You said, ‘‘eliminate the fine.’’ So, you do 

have discretion to not impose any fine—— 

Mr. BARAB. In exceptional cases—— 

Senator HEITKAMP [continuing]. Based on—— 

Mr. BARAB. In general, our law requires us to issue a fine when 

we find a violation, especially if it is a serious violation. But there 

are other than serious violations. Now, an extension cord, I mean, 

that is something that it can cause fires, electrocutions—— 

Senator HEITKAMP. No, I know. 

Mr. BARAB. It is not necessarily—I mean, people throw some 

things out, but they actually, when you look at them, when we look 

at the past history—— 

Senator HEITKAMP. No, I thought it was a good example, because 

it can be, in the wrong place, incredibly dangerous. But, my point 

is, I would have to go back and take a look, because I am shocked 

that you could not waive a fine or a penalty in its entirety given 

kind of the relationship and compliance and what do they know 

and lack of knowledge and severity. 

So, we will followup. I have to go vote. 

Senator LANKFORD. Thank you. We will finish up in just a couple 

of minutes, because I am going to have to go follow and vote, as 

well. 

This is one of the areas that we want to examine. It is the reason 

we have this type of hearing and debate. We will dig into it and 

find out from you all what you need, because I would hope that you 

are in the same position that we are working on health and safety 

and making sure we are protecting lives and this is not all about 

fines. As you mentioned before, the fines are not coming back to 

the entity themselves, anyway, so this is not a, quote-unquote, 

‘‘money maker’’ for the agency. It is a deterrent, but we have to 

find a way to be able to balance this out. 

One of the things that I had noticed was in 2011, the President 

issued a memorandum for the heads of the executive departments 

on regulatory compliance. OSHA and EPA were specifically noted 

in that for being good actors in it and highlighted some of the compliance and enforcement information and how you are making that 
23 

publicly available. So, that is a positive thing to say. Your agencies 

both are building in transparency on the basic issue of compliance 

and enforcement information. 

Not every agency is dealing with this. I am not going to ask you 

to answer for everyone else. But, the Department of Transportation 

(DOT) updated their stuff in 2011, and then since 2012, there has 

been no change at all on their website on the information on compliance and enforcement information. 

So, one of the things that we are asking of the administration is 

to help us, when the information gets out there and is helpful, to 

make sure all agencies are actually fulfilling that, are getting that 

information out, which both of your agencies are, but the Department of Transportation is not. So, that kind of consistency is extremely important. 

We do need to work with your entities on things like minor violations. Was a poster missing? Was a piece of paperwork missing? 

Again, I had another agency and another entity that I dealt with 

as a manufacturer in my State that had not turned in paperwork 

a particular year saying they had nothing to turn in, and their 

wrong assumption was, I had nothing to report and so I did not 

have to turn in that report this year because there was nothing to 

report. They ended up having a huge fine come down on them for 

not turning in paperwork saying they had nothing to turn in. 

Well, again, that just begs this question of how is that helping 

health and safety? That is a paperwork violation issue. There 

should be a, hey, you did not turn that in. You are right, we did 

not turn it in. But, instead, they had a fairly significant fine that 

came down on them for that. That is the kind of stuff that we need 

to figure out, to say, if you feel bound, or if agencies feel bound to 

be able to do a fine in that type of situation, then we have a problem. 

One of our businesses said that they were hesitant to voluntarily 

invite OSHA into the workplace to do the onsite consultation programs because of their concern over that. Now, I heard from both 

of you, you want to work especially with small businesses to do the 

onsite consultation, to be able to help them through that. What is 

something that can be done to encourage more businesses to say, 

invite us to come in. We are not coming in to fine you. We are coming in to be able to help, to do almost a pre-inspection inspection. 

Mr. BARAB. Yes. I often call our consultation program our best 

kept secret. It is a wonderful program. We try everything we can 

to really promote it, not only ourselves, but through associations. 

And, I want to emphasize, and we try to emphasize this with employers, we fund at least 90 percent of the consultation program. 

We do not run it, though. We give that money to the States and 

they run it. So, it is totally separate from OSHA, and that is what 

we try to emphasize to employers, that this is totally separate from 

OSHA. It is a free visit, basically, that small employers can receive 

and everybody should be taking advantage of it. 

Senator LANKFORD. But, some are concerned that they should not 

because they are, for whatever reason—what I am telling you is, 

it is a good program—— 

Mr. BARAB. Yes. 
24 

Senator LANKFORD [continuing]. And it does focus on health and 

safety and on compliance on issues and thinking outside the box 

and some things. There has to be a way to be able to communicate 

this so that individuals know, hey, this is a neutral spot. Unless 

there is some major gross something that is here, this is a good 

spot. 

Mr. BARAB. Well, we would love to work with you on ways to do 

that. 

Senator LANKFORD. OK. 

Mr. BARAB. There are a lot of myths out there that we would love 

to be able to combat and we would love to work with you to do 

that. 

Senator LANKFORD. Well, this is something, I am saying, perception and reality. This is a business owner that said it to me directly. Yes, I know there is that type of a consultation. There is no 

way I would take that. Ms. Shinkman. 

Ms. SHINKMAN. And, I would just briefly like to say, particularly 

for small businesses, we have an audit policy where, if they voluntarily disclose and fix what it is, there is minimal, if any, penalty 

at all. So, we encourage it. The sooner it is disclosed, the more voluntary audit of themselves to determine what the problems are—— 

Senator LANKFORD. Is that the eDisclosure program? 

Ms. SHINKMAN. Yes, it is. 

Senator LANKFORD. OK. Tell me a little bit about how that 

works, and what I would like to know is, how do you evaluate its 

effectiveness on how it is actually accomplishing the mission? How 

do you evaluate that? 

Ms. SHINKMAN. Well, it is about 2 months old, so I am not too 

sure—— 

Senator LANKFORD. OK. It is a little early, then, yet. 

Ms. SHINKMAN. I do not think we can give you any kind of an 

evaluation. But, it was formed so that we could quickly see these 

audit disclosures for a number of cases, particularly smaller ones 

like you have described, and for small businesses where they, 

through a web portal, give us notice of what they have disclosed— 

what they are disclosing—— 

Senator LANKFORD. So, give me an example of some of this, because this is their own safety systems, right, their own safety 

checks that they are doing. They find something, know it is a violation. Give me an example of something they would turn in and say, 

hey, we found something. We are going to report it. 

Ms. SHINKMAN. We have determined that we do not have the 

number of containers that we are supposed to for a certain thing, 

or they have not been updated at a certain time. So, we are going 

to do that. We discovered it at X date. We did whatever it is to 

remedy it. It will be done by Y date. And, we are disclosing it to 

you now and we have a policy for making sure that it is not going 

to happen again. And, this is all disclosed electronically, and if all 

of the criteria are met, they will receive a notice that it has been 

disclosed and their issue would be closed out. 

Senator LANKFORD. And, including the benefit? Penalty, as you 

mentioned before, part of the penalty is did they receive some sort 

of benefit by delaying that. Would that be waived, as well, or would 

that be something you guys would look at and go, hey, you did not 
25 

change this. You got an arbitrary benefit that other companies did 

not get. 

Ms. SHINKMAN. I think that would not apply here, because part 

of the criteria is the early disclosure. 

Senator LANKFORD. OK. 

Ms. SHINKMAN. So, the criteria themselves eliminate those problems. 

Senator LANKFORD. OK. That will be one that we want to watch, 

to be able to see how that works, because that gives a clear set of 

guidelines out there that people can find and note and to be able 

to help self-manage. I just want you to know from our Committee, 

we are going to watch and figure out how that is being evaluated 

to see if that is something that can be shared with other agencies 

and entities. 

I would also share, as well, and this is just in our ongoing conversation about fees and fines and penalties, we are watching some 

entities like Fish and Wildlife Service. Fish and Wildlife Service 

has the opportunity for a penalty or to be able to make a contribution to a third-party organization that is a nonprofit. We are trying 

to figure out who sets that, who guides that, where does that 

money go. That is money that would have been to the General 

Treasury now that is to certain outside third-party entities for mitigation or whatever purposes, and, so, we are asking, I think, a fair 

question for the taxpayers’ behalf. 

If it is a fine that goes to the General Treasury or that you donate to a third-party organization, we want to know who picks that 

and where does that go and what is the long-term benefit of that. 

EPA uses Supplemental Environmental Projects (SEPs), but my 

understanding is that is you can have a penalty or you can basically fix it and here is what we would encourage you to do in some 

ways. How are those SEPs decided? 

Ms. SHINKMAN. Those SEPs are voluntary by the company if 

they—to set off part of the penalty by doing a project. Let me make 

it clear that they are never cash donations. 

Senator LANKFORD. Right. 

Ms. SHINKMAN. They are always voluntary projects to help the 

environment. There needs to be a nexus between what that project 

is and what the violation was. There will also always be some cash 

penalty. It is not 100 percent mitigation against the penalty 

and—— 

Senator LANKFORD. Is it typically 80 percent? Because the goal, 

again, is to deal with health and safety and environment at that 

point. So, you are saying it could be a control project or monitoring 

project or something else around them or around the city or around 

the community—— 

Ms. SHINKMAN. It could be—— 

Senator LANKFORD. What does it typically look like? 

Ms. SHINKMAN. Typically, it looks like something like a decision 

to do monitoring for children for asthma or for lead in a certain 

school district for a certain period of time. The asthma might be 

the result of a clean air violation. The lead, for a different kind of— 

the lead monitoring, those sorts of things, purchase of emergency 

equipment if there has been a violation that is similar to that. 
26 

So, here is a policy. We have redone our entire policy so that it 

is much clearer. We did that last year, so the standards that are 

necessary to meet—we have strict standards and they are more 

clearly set out. A small business can get up to 100 percent set off 

of their penalty. Others, usually, it is around 80 percent. It really 

depends on the quality and the type of the project. But, it is never 

money that is just handed to somebody. It is never a project that 

EPA itself controls. 

Senator LANKFORD. Right. EPA is different than other entities on 

that. There are other entities that are doing mitigation separately 

to an outside third party rather than a fee or fine, and that is one 

of the questions we will ask. Obviously, I am not going to ask you 

to answer for another entity on that. 

We are quickly running out of time, and I know you are thoroughly enjoying this conversation, but we do have votes that are 

happening currently. I have to head over to that. I am not going 

to hold you over to be able to come back and forth. 

I do want to maintain this conversation. What we would ask of 

you is I am sure that there are ideas that you or your entities 

would be interested to be able to share ways they can improve this 

process, whether that be process changes, issues in statute that 

had become a problem or that create a barrier between the people 

we serve and those of us who serve them, as you do, as well. That 

should be fixed and could be fixed. I want you to know, those are 

the type of things we are also looking for, as well. This is not a 

one-way conversation. 

And for this Committee, we hope to be able to put products out 

in the days ahead to say, let us help fix some of the broken relationships that we have there and still be able to work on health 

and safety and environmental protection that need to be done. So, 

as you have thoughts on that, we are free to hear those and we are 

interested in those, as well. 

I appreciate you being here and for the work that you put into 

this conversation and we will do some followup with some questions for the record in the days ahead on that. 

I would like to make a statement to all that on February 24, this 

Subcommittee will also hold a hearing examining the burden of 

Federal statutes and regulations placed on State and local governments, what we have learned since the passage of the Unfunded 

Mandates Reform Act of 1995, and how the Unfunded Mandates 

Information and Transparency Act can improve upon those efforts. 

This will conclude today’s hearing. The hearing record will remain open for 15 days, until the close of business on February 26, 

for the submission of statements or questions for the record. 

With that, thank you very much to our witnesses. This hearing 

is adjourned. 

[Whereupon, at 10:48 a.m., the Subcommittee was adjourned.] 
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