Category Archives: Corporate Wrongdoing

If Big Business Wrote a Letter to Santa Claus this is What It Would Say

If Big Business wrote a bill to help itself get rid of regulations it didn’t like, what would that bill look like?

We don’t have to guess anymore. This week, a group of legislators introduced the Regulatory Improvement Act, a bill designed to “improve” our nation’s regulatory system, remove “government bureaucracy and red tape,” and help businesses avoid the “burden” of complying with safeguards and standards that protect our health, safety, environment and workers. Their solution? Have politicians appoint a panel to recommend regulations for Congress to ax in a rushed process.

The bill sets up a so-called “Regulatory Improvement Commission” tasked with an already predetermined outcome. That outcome is deregulation, plain and simple. Deregulation, you probably remember, led to the financial crisis of 2008. In a time when we’ve seen so many instances of industry bad actors — including at least 13 deaths due to faulty GM ignition switches that company officials knew had problems, years of toxic air pollution and water pollution from giant companies, and financial service companies like Sallie Mae taking advantage of our veterans — should we really be thinking about how to remove vital public protections for our health, safety, environment and financial security?

The commission’s mandate would be to modify, consolidate or repeal existing regulations to reduce compliance costs for business, completely ignoring the tremendous societal benefits that standards and safeguards give to the American people.

While it takes years for a federal agency to get a final rule out the door after numerous periods of public comment and review, this commission could erase this beneficial work within months. The review process is blatantly tilted toward benefitting corporate interests rather than the public interest. The procedure for how public comments on the commission’s reports are received, and even the way the commission is tasked with writing its reports on regulations are all slanted to examining the burden on businesses, never the benefits to the public. For instance, even the “costs” associated with doing taxes counts as a burden!

Supporters argue that the commission can review only those regulations finalized more than 10 years ago. Just think of how much progress we have made in the past four decades from the Clean Air Act, Clean Water Act, Occupational Safety and Health Act, Americans with Disabilities Act and much, much more. Regulations created from these and other laws would now be at stake.

And if there is an outdated regulation that could be removed, would it be worth all of this effort? There may well be a regulation pertaining to floppy disks, fax machines or pagers—but no one uses them anymore, and those regulations aren’t costing us anything to have written down somewhere. Is it worth setting up a new commission to remove superfluous regulations like that? Besides, most agencies already look back at existing rules – in a process that is far more careful and less politicized than the one this bill proposes.

And after all this, the commission is completely unaccountable to the public. The bill expressly states that the commission is exempt from the requirements of the Federal Advisory Committee Act (which requires public accessibility to meetings, open meetings and written advanced notice of a meeting a minimum of 15 days prior). According to the Regulatory Improvement Act, if just one member of the commission objects to a meeting being public, that meeting can be held in private.

Our vision for regulatory improvement

Nowhere does the Regulatory Improvement Act provide a way to update standards, make them stronger or more effective. If we were to write our own Regulatory Improvement Act, we would call for a regulatory review process that focuses attention on the need for stronger controls on corporations and expanded protections for the public.

Just because something is repeated often does not make it true. There is not an overabundance of regulation in this country. In reality, too much of our regulatory system has today slowed to a crawl, thanks in part to Big Business pushing at every point in the process to slow or stop new standards. They lobby against new laws; they lobby against new rules that agencies write under the existing laws; and then they lobby against strong enforcement of the rules that do get through.

By updating safeguards to better protect the public and making sure corporate bad actors are held accountable, our vision of regulatory improvement will be creating a system of standards and safeguards that better protects health and safety and puts everyone on a more equal footing, creating a fair economy for all.


In Remembrance: Workers Memorial Day 2014

(Cross-posted from the Center for Effective Government Blog)

by Katie Weatherford, 4/28/2014

April 28 is Worker’s Memorial Day, an international day for remembering workers who have been injured or killed as a result of on-the-job incidents or long-term occupational illnesses. On this day, we also celebrate the substantial progress made in protecting workers over the forty-plus years since theOccupational Safety and Health Act of 1970 (OSH Act) was enacted and remember how critical it is to continue the important work of ensuring our workers’ health and safety.

In advance of Workers Memorial Day, the National Council for Occupational Safety and Health (National COSH) released its annual report, 2014 Preventable Deaths: The Tragedy of Workplace Fatalities.  Among many highlights, the report provides case studies of seven workers who died in 2013 and 2014.  Notably, each of these individuals was employed in very different occupational settings, from a warehouse worker to a cinematographer to an airport baggage handler, showing how “any job can become dangerous at a moment’s notice.”

These seven workers are representative of thousands of workers who die every year in the United States.  According to the Bureau of Labor Statistics, 4,383 workers were killed on the job in 2012, which means that every day, 12 workers did not return home to their loved ones. In addition to on-the-job deaths, 50,000-plus workers die every year from long-term occupational illnesses.

View the full infographic.

Considering the 14,000 workplace deaths that occurred in 1970, it is clear that the OSH Act has played a significant role in reducing workplace deaths and improving worker health and safety. In fact, more than 492,000 workers’ lives have been saved since the OSH Act became law. It is crucial that this progress continue so that when someone leaves for work, they can rest assured they will return home safely at the end of the day.

Unfortunately, Congress has not provided OSHA with the resources it needs to carry out the agency’s important work. OSHA’s budget has continued to decline every year since 2010. The agency also lacks the staffing it needs to inspect the approximately 9 million workplaces across the country. At present, OSHA operates with only 2,200 federal and state inspectors who oversee more than 130 million workers, or one inspector for every 59,000 workers. This means that each workplace might only be inspected once every 105 years. Clearly OSHA needs more, not fewer, resources for its inspection and enforcement activities. (For a visual representation of these numbers, check out our Workers Memorial Day infographic here).

This Workers Memorial Day, let’s remember our friends, family members, and colleagues who have been killed or injured at work. Starting April 29, let us join together to redouble our efforts to protect workers and ensure that worker fatalities, injuries, and illnesses continue to decline every year by demanding Congress give OSHA the resources it needs to continue its critical work.

U.S. Chemical Safety Board on Texas Fertilizer Disaster: Voluntary Compliance No Substitute for an Efficient Regulatory System

“[T]here is no substitute for an efficient regulatory system that ensures that all companies are operating to the same high standards. We cannot depend on voluntary compliance alone.”

That’s what Rafael Moure-Eraso, chairperson of the U.S. Chemical Safety Board (CSB) said this week. The CSB, an independent federal investigative agency, was releasing its preliminary findings on the West, Texas, fertilizer explosion of just over one year ago, which killed 14 individuals.

The CSB faulted the company involved and pointed to gaps in the regulatory system – a lesson that needs to be headed here and to prevent other disasters. Said Moure-Eraso:

“The fire and explosion at West Fertilizer was preventable. It should never have occurred. It resulted from the failure of a company to take the necessary steps to avert a preventable fire and explosion and from the inability of federal, state and local regulatory agencies to identify a serious hazard and correct it.”

The report noted that:

  • The explosion at West Fertilizer resulted from an intense fire in a wooden warehouse building that led to the detonation of approximately 30 tons of ammonium nitrate stored inside in wooden bins.
  • The building lacked a sprinkler system or other systems to automatically detect or suppress fire.
  • Texas has not adopted a statewide fire code, and state law actually prohibits most small rural counties from adopting a fire code.
  • Although some U.S. distributors have constructed fire-resistant concrete structures for storing ammonium nitrate, fertilizer industry officials have reported to the CSB that wooden buildings are still the norm for the distribution of ammonium nitrate fertilizer across the U.S.

The facility that exploded operated under few rules. It didn’t have a sprinkler system because no sprinkler system was required.

Lax rules have consequences. That’s a lesson policymakers need to take to heart – whether it’s about fertilizer facilities, food manufacturers or farmers, big polluters, automakers or any other area where the public’s safety and wellbeing is at stake. The CSB report underscores the need for a more pro-active, aggressive approach by regulators to protect the public.

Anadarko: Just One Example of Corporations Getting a Refund for Their Crimes

Imagine a company that, for 85 years, polluted the environment by dumping harmful uranium, wood creosote, and rocket fuel waste (including on Native American land). That waste contaminated and sickened over 7,000 people. That company then paid $5.1 billion to resolve charges by the federal government.  Then that very same government gave that company $550 million back in tax benefits, because the company was able to write their payment off as a “business expense.”

Sadly, this isn’t fiction, but a reality. Just last Thursday, Anadarko Petroleum paid the largest sum ever to resolve environmental charges. But on that very same day, the company announced it expected to receive a $550 million tax benefit due to this “business expense.” In fact, investors reacted favorably to the payment.

Anadarko Petroleum isn;t the only company that got to receive tax breaks from paying to settle charges
Anadarko Petroleum isn’t the only company that got to receive tax breaks from paying to settle charges

And this is the norm, rather than the exception for these kinds of payments.  JPMorgan was able to write off part of a $13 billion payment for its role in the housing crisis that lead to the worst economic downturn in decades. A pharmaceutical company was able to write off its payment after it was fined for unlawfully advertising drugs.

We have standards and safeguards in place to protect the public and the environment, when they are violated people are hurt, and reckless companies shouldn’t get off the hook.

The problem is that corporations usually can write off most parts of their payments to resolve charges. And there is no clear clarification on the definition of penalties for tax purposes.

After already being victimized by these corporations which led to settlements and fines in the first place, taxpayers are then literally forced into paying for corporate wrongdoing in the form of tax breaks.

There is a solution to this problem, in the form of a bipartisan bill by Senators Jack Reed and Charles Grassley, the Government Settlement Transparency and Reform Act. The bill would end this ridiculous loophole, making sure that corporate wrongdoers don’t benefit from a tax break after they break the law.

Companies like Anadarko and JPMorgan must pay their full debt to society.  Corporations shouldn’t get huge tax benefits from damaging the environment and sickening thousands of people, and their officers should be held responsible when they fail to inform and warn consumers about safety problems. When corporate wrongdoing threatens our well-being and safety, we need to stand up and say enough is enough, and stop letting corporations get away with their crimes.

GM Cut Corners and People Died. Will Anyone Be Held Accountable?

General Motors must be held accountable for negligence leading to the deaths of 13 drivers. We have now learned that GM could have avoided the faulty ignition switch issue if it had paid an extra 90 cents per car. GM and the responsible corporate officers at the company must be held accountable and face criminal penalties for killing people – but under current law, that won’t happen.

We need to demand stronger public protections so that corporations aren’t incentivized to break the law

As we see time and time again, some corporations put profits ahead of customer safety. Richard Cohen writes, “[GM] is a bloodless corporation that was — remember? — quite willing to insist to some poor victim that it was not the same GM that had made the faulty car.”

This is, of course, not the only example of corporate wrongdoing or negligence which has led to immeasurable human costs. Tales like these are happening every day. On Thursday, Anadarko Petroleum was fined by the federal government over its harmful environmental practices, including leaving radioactive waste piles in Navajo Nation territory. The negligence and sheer lack of concern for anything but profits left 7,000 people sick from radioactive waste.

And as we all know, not one Wall Street executive was put in prison for gambling away the hard-earned savings and retirement accounts of millions of Americans. Big banks crashed the economy, leading to the worst economic crisis we’ve had since the Great Depression — millions of Americans lost their jobs, their homes and their financial security. So you’d think that the executives would be in trouble, but instead, we bailed them out.

Our nation’s system of public protections needs to be strengthened so that those responsible don’t get away with their crimes. How is any company incentivized to act according to the law if corporations pay just a small fine to make their problems go away?

As a country, we must establish clear criminal penalties for cases where there was a failure to inform and warn and strengthen our federal rulemaking agencies — not just NHTSA — that have the responsibility of setting standards to protect the public from just this sort of corporate corner-cutting.

Finally, we need to ensure companies take health and safety seriously — that they don’t see loss of life of workers as a “cost of doing business” that they are willing to absorb because the fines are low. Today, even the biggest companies in the country can be fined just $7,000 for an individual safety violation that could lead to a worker’s death. Today, we see companies facing penalties for their negligence such as GM, Anadarko and Wall Street banks — but no one involved will go to jail. We need a more serious deterrent: the real threat of jail time for a corporate officer who knowingly avoided consumer and worker safety to increase profits.