Budget Deal Bodes Positive for Housing Industry, Some Downsides

ThinkstockPhotos-152988221President Obama on Monday signed a bipartisan, two-year budget deal that prevents an impending government shutdown, increases spending caps and suspends the debt limit until 2017. Though the outlook for the housing industry looks promising, the budget deal is not without its downsides.

A small provision (Section 701) included in the bill amends the Federal Civil Penalties Inflation Adjustment Act of 1990 to require all federal agencies that issue fines to private sector organizations to recalculate their penalties annually to account for inflation.

Previously, agencies only had to readjust their penalties every four years. It is expected that this new measure will increase revenue by $1.3 billion over 10 years.

The Occupational Safety and Health Administration was one of the only agencies not covered by the act (the other being the Internal Revenue Service). This provision ends that exclusion, and OSHA fines will increase next summer.

In addition to annual recalculation, Section 701 specifically requires OSHA to use a catch-up formula to reach the current inflation level, which could mean a drastic 150% increase in fines.

The provision also allows OSHA to raise fines annually in line with the Consumer Price Index (CPI), and thereafter adjusted for inflation. OSHA was one of few federal agencies with civil penalties that do not increase with inflation.

The penalty increases, which were included in the budget deal after closed-door negotiations, have long been coveted by labor groups, but repeatedly defeated by NAHB in legislative battles. The last time OSHA maximum penalties were raised was in the 1990 budget reconciliation bill.

Increased penalties will be particularly important where there are widespread serious or willful violations. If OSHA adjusted its fines by the CPI since 1990, the $70,000 maximum fine for repeat and willful violations could increase to $127,438 and the $7,000 serious violation maximum fine could increase to $12,744.

The adjustment is expected to go into effect no later than August 2016 through an interim final rulemaking. NAHB is closely following the progression of the budget deal and will follow up with additional details in the coming weeks.

Please contact Alex Strong or Rob Matuga with questions on the budget deal or OSHA provision.

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  1. » Penalties for OSHA Fines Will Increase Aug. 1 | July 8, 2016
  1. Rick White says:

    Another example of closed door hearings!

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