Audit, Compliance and Risk Blog

Most laws include penalty provisions, for assessment against people who fail to comply with legal responsibilities created by the laws. Back in 1996, Congress noticed that inflation was steadily reducing the deterrent effects of the penalties set forth in statutes, and that Congress itself was not reliably adjusting the maximum penalties assessable by enforcement personnel. Rather than burden itself with a responsibility to amend laws to keep up with inflation, Congress enacted the passed Debt Collection Improvement Act (DCIA) of 1996 to assign that responsibility to administrative agencies. DCIA requires most federal agencies to issue rules at least every 4 years, adjusting most penalties for inflation. In the ensuing 17 years, most agencies have made these periodic adjustments—larger in times of high inflation and lower in times of low inflation.

Advances in field techniques have recently made hydraulic fracturing— “fracking”—a major part of energy production in the United States and Canada. Frackers pump high-pressure fluids into rock formations to expand cracks and create pathways for valuable hydrocarbons to flow out. The stimulant fluids are usually water-based, with additional chemicals (acids, surfactants, biocides, etc.) to improve effectiveness and solid ‘proppants’ to prop open the expanded openings (sand, etc.). Read my earlier blog here

On October 28, British Columbia, California, Oregon and Washington signed the Pacific Coast Action Plan on Climate and Energy, committing themselves to align efforts to control greenhouse gas (GHG) reductions to combat climate change, and to promote clean energy. The Action Plan is adopted under the aegis of the Pacific Coast Collaborative, which encompasses these four jurisdictions plus Alaska.

Workers throughout the United States and Canada are protected by occupational health and safety laws, administered by federal, and state or provincial worker safety agencies—such as the U.S. Occupational Safety and Health Administration and the Workers' Compensation Board of British Columbia (WorkSafeBC). Most of these agencies recognize workplace violence as a potential hazard, although regulatory requirements associated with this hazard vary considerably among jurisdictions. Effective November 1, 2013, British Columbia supplements its longstanding workplace violence prevention requirements with requirements for "all reasonable steps to prevent where possible, or otherwise minimize, workplace bullying and harassment." BC provides separate, complementary rules for:

The US Occupational Safety and Health Administration (OSHA) regulates thousands of chemicals, through a variety of regulatory standards.  At the broadest level, employers must evaluate basic information about every potentially hazardous chemical, and provide information to employees in compliance with OSHA's Hazard Communication Standard.  OSHA also provides somewhat-more-tailored requirements for classes of chemicals (such as flammables), and for types of activities that pose chemical hazards (such as welding).  For a small number of especially hazardous chemicals, OSHA provides a detailed standard applicable to a single chemical—examples include asbestos, benzene, and lead.  On September 12, 2013, OSHA published a proposal to establish just such a single chemical standard, for crystalline silica (29 CFR section 1910.1053).

On September 20, the US Environmental Protection Agency (EPA) re-proposed regulations to regulate carbon dioxide (CO₂) emissions from electricity generating units fueled by coal and natural gas.  This proposal marks the latest of many ongoing steps by the Obama Administration to limit emissions of greenhouse gases (GHGs) even though Congressional deadlock means there will be no legislative initiatives until after the 2014 elections at the earliest.  This proposal applies—critics say stretches—EPA's Clean Air Act (CAA) authority.

On September 18 the Securities and Exchange Commission (SEC) proposed to require public companies to calculate and disclose the pay ratio between their principal executive officer (PEO) and other employees:

Do you know what's in the chemical products you buy and use, and whether they're "safe?"  Effective October 1, 2013, California regulations provide criteria and procedures for state-level identification and listing of likely-hazardous chemicals of concern.  Manufacturers and importers will be required to evaluate chemicals of concern in consumer products, their potential alternatives, and how best to limit exposure or reduce hazards.  Assemblers and retailers will have related responsibilities.  Although these requirements apply directly only within California, any reviews and reformulations are likely to affect global production and distribution decisions.

Directors and officers owe formal duties to their corporations and shareholders, commonly called “fiduciary duties” from the Latin root words for “trust.”  These duties developed over centuries of common law, and now appear in state corporation codes.  Most interpretations of these duties and how to meet them actually appear in court decisions, arising in cases where aggrieved shareholders sue claiming that a company’s directors and/or officers have breached one or more of these duties.