By Tom Badstubner, Marilyn Dempsey, Michael Dodd, Rick Schweitzer and Steve Guglielmo
The GAWDA Consultant Program is a GAWDA member benefit that is included as part of your member dues to the association. It is consistently rated as one of the most valuable member benefits that GAWDA provides. Between the four of them, GAWDA’s consultants bring more than 100 years of industry-specific experience to the association.
In the first two issues of 2022, we spoke with the consultants about a variety of topics that will impact your business in 2022. From recently passed or upcoming legislation, to the continued impact of COVID, to an increased frequency of inspections. In this issue, we followed up on those discussions to see if those expected trends have come to pass and discuss what is on the horizon as we move into the second half of the year.
Thank you to Tom Badstubner, GAWDA’s FDA and Medical Gases Consultant, Marilyn Dempsey, DHS, EPA and OSHA Consultant, Mike Dodd, DOT Consultant, and Rick Schweitzer, Government Affairs and Human Resources Consultant, for lending their time and expertise to discuss these important topics. The following is a lightly edited transcript of that conversation.
Welding & Gases Today: Our first two issues of 2022 were more forward-looking, discussing things that we expected to happen over the course of the year. Now, as we’re halfway through 2022, what are you seeing?
Tom Badstubner: The most significant action taken by the FDA in decades was announced on May 23, 2022. The long-awaited proposed new medical gas regulations have been published.
Comment Period – The proposed new regulations will have a comment period until August 21, 2022. This will give us time to respond to specific items of concern.
Likely effective in 2024 – The agency intends the final rule to become effective 18 months after it is published in the Federal Register. We should have ample time to understand and implement the final rule.
Labeling – Most of the existing industry practice will not change. However, the FDA is proposing an additional warning and graphic to avoid smoking or vaping around oxygen.
CGMP – The agency is proposing many of the safety and process suggestions which were requested by industry. There are a few exceptions we need to clarify.
NDA/NADA Requests – The “certification” regulations for original manufacturers to receive New Drug Applications is being proposed. This is similar to the existing guidance.
Adverse Events – The FDA is proposing clarifications and new regulations about reporting adverse events with medical gases. Most of the responsibilities fall on the original manufacturer. However, cylinder fill plants will also report if they become aware of an adverse event.
No Immediate Change – This is an important step forward. We appreciate the long-term, consistent leadership from CGA and GAWDA to encourage the FDA to propose these new regulations. However, these are NOT final regulations. No change in operations, labels, procedures, or forms should be required until the shape of the final regulations becomes clear. We will keep you informed.
We’re also seeing some FDA audits starting up again. The FDA started resuming audits on February 4th, and we have witnessed some, though not a huge amount. But we are still seeing on-site visits.
We’re also seeing training visits, where an experienced inspector brings in a less experienced inspector. These are typically more rigorous because they’re using it as a training experience. And those are multi-day experiences.
WGT: Do you prepare for those any differently than you would a typical inspection?
Tom: No. In an earlier article, we talked about how to prepare for an FDA audit. If you have your people trained, your calibrations up to date, and your records clean and complete then you’ll be fine.
WGT: Are they looking for anything specific or is there a particular point of emphasis in these visits so far?
Tom: Good question. Just before the pandemic, we saw the FDA looking into data integrity. And we’ve spent some time discussing data integrity in our monthly Safety Managers Safety Meeting. This Spring, we’re seeing a renewed emphasis on data integrity by the FDA. The FDA really started inspecting our industry for data integrity in early 2020 and then was interrupted by the pandemic, but now it’s resuming again. So, I really think that data integrity is something that is here to stay for the FDA. And for most member plants, that’s not a big deal. Just make sure that your error corrections are done properly. If you have a gas chromatograph, it is a little more detailed, but, really, data integrity, for most of us, is not a big deal.
Rick Schweitzer: There are a couple of trends that we’ve identified, as well. The first one is that we’re now moving away from COVID to decarbonization of the economy, or climate change issues. COVID is pretty much over, at this point. Both from a medical and a political/regulatory standpoint.
Everything now is on climate change and decarbonization. We’re seeing a proposed rule from EPA on engine emissions from heavy-duty trucks. And this is going to impact GAWDA members pretty significantly. The proposal would begin with the 2027 model year and would require a very significant reduction in nitrous oxide engine emissions. Over the last couple of decades, EPA rules have already taken out 98% of the engine emissions for NOX. This is going after that last 2%. It’s going to raise prices.
And then there are further SEC rules on publicly traded companies that will require reporting of emissions for investors. So, a company that is involved in fossil-fuel production will have to report all of the emissions that come out of their investments, as well as those of their customers and their vendors. That’s a massive reporting goal.
WGT: How much of this, even if it does pass before 2027, do you think will survive all the way until 2027?
Rick: Well, that’s a very good question. The EPA is trying to get a final rule out before the end of the year. Clearly, they’re trying to beat the elections, I think. Let’s game this out and say that the Republicans take over the House and the Senate. Well, one way that they can get rid of this is by doing a Congressional Review Act review of this and passing a resolution in the House and the Senate that would overturn the EPA Final Rule. But President Biden would probably veto it and you would need a 2/3 vote in the House and the Senate to overturn that veto. They aren’t going to get that, regardless of what happens in the elections. So, then you’d have to wait for the 2024 elections. Maybe there’s a new president in 2025. And let’s assume it’s a Republican. Then, it’s possible, that they could either delay or reconsider this. But, right now, it looks like if they come out with a final rule it would probably end up happening.
The other thing on decarbonization that will impact our members is that there is $7.5 billion in the infrastructure law that was passed last year for electric vehicle charging stations. They are going to build a network of half a million EV charging stations on all of the interstates and federal-aid highways. That’s a tremendous infrastructure investment. But that also begs the question of where the electricity is going to come from? And that, we don’t know yet.
WGT: On the topic of data integrity, it seems like more and more we’re hearing about the potential for cyber-attacks. Marilyn, is that something that you’re seeing, or is that just conjecture at this point?
Marilyn Dempsey: I receive red alert updates from DHS as to the attacks and patches for various internet browsers, whether it’s Safari, Mozilla, or Chrome. This really is on a higher level, where they’re trying to close the pipeline when there has been an intrusion. So, the action is in the back-office, where they’re identifying threats and creating protection for the data. We, as consumers, receive notice(s) that the server may be vulnerable and what updates should be installed.
WGT: As far as best practices, is there anything that you recommend to members?
Marilyn: Besides following the recommended security updates, I think everyone should have an IT policy defining the types of emails employees should respond to/not respond to, what activities are allowed on company equipment and to whom should an employee report suspicious activity.
These steps can protect a company from being phished, spammed, or held for ransom. That doesn’t happen in our industry often, but if you don’t have practices and protocols in place it is more likely to happen. I know of a company where an HR representative received an email purporting to be from the CEO, asking for all employees’ social security numbers. That raised a red flag for the HR rep., and they stopped it before personal information was released.
And, even if your company has protocols in place, employees should double-check the email addresses that the email came from. If it seems fishy, it likely is fishy! So, make a phone call to your IT department.
Tom and I have recently received emails from a GAWDA member after they received an email purporting to be from federal agencies. The email asked what they were shipping, what hazard classes and what ZIP codes they were shipping to. And it turned out to be part of PHMSA’s effort to enhance shipment security.
Mike Dodd: I had one of our members send me that notice and he was trying to figure out, “Is this real?” And I put them in touch with Rick. But the piece of paper he got looked very official. And I’ve only gotten the one so far. And it said the member was “randomly selected to provide this information.”
WGT: You mentioned FMCSA. In this issue of the magazine, we’re talking about the FMCSA’s agenda and priorities (page 26) that were sent out earlier this year. How will that impact GAWDA members?
Rick: One other thing that has come up since that agenda was sent out is that they are going to go through with a rulemaking on speed limiting devices on commercial motor vehicles. They are going to do a supplemental notice of proposed rulemaking that will require all vehicles that have that capacity, which is basically every truck since about the 2003 model year, they are going to require you to set a speed limit on that vehicle.
They haven’t come up with the actual number yet, but it will probably be somewhere in the 65-70 mph range. But that is something that they’ve indicated that they are going to go forward with. They’re going to have to come out with another proposed rule. There will be an opportunity for comments, and then they will come out with the final rule. So, this is over the next several years.
WGT: What would that mean for GAWDA members?
Rick: Not a whole lot, to be honest with you. Since they’re primarily in local distribution, they’re not out on the roads running hundreds of miles on the interstates. I think it’s going to affect long-haul truckers much more than local distribution operations. But it means your driver isn’t going to be able to speed as much on the local interstates. Which is a good thing.
WGT: Mike, we had a chance to speak shortly after the February DOT changes went into place. Now that we’re a few months past that, are you seeing anything interesting?
Mike: The changes that went into place had to do with driver licensing. After that date, anytime a company had a driver that needed to get a new CDL or upgrade their CDL from a C to a B, or a B to an A, or get a HAZMAT endorsement for the first time, as of February 7th, they had to use one of the registered training providers. That has been cooking right along. I think it got off to a slow start because I don’t think many people believed it. And then, when some of them started going down to the license bureau, they finally woke up and found out that they had to do these new things. And that’s when I started getting some phone calls.
A lot of them didn’t have to hire a driver yet at the time. Now that’s been on the road for a while, there are drivers that need to be hired or employees that they want to turn into drivers. And so, they have been using the new process. We have found two or three companies that have a very reasonable price for the services. And I got my first feedback on the process. Minneapolis Oxygen sent me a very detailed timeline explaining the process that they went through and that everything went very smoothly, and that the driver was able to obtain a license and HAZMAT endorsement. So, they were quite pleased. And I expect that will be the case more and more.
WGT: You mentioned companies searching for drivers or even transitioning internal employees to become drivers. We keep hearing about the driver shortage. Is it abnormal for there to be this many less experienced drivers on the road and does that make companies more susceptible to DOT stops or audits?
Mike: No. Remember, this is a program that has been in action to be put in place for 6-9 years now. They have wanted to do this for some time because they wanted to get a more qualified driver and a safer driver on the road. It’s all about driver safety. And so, the idea was put together, but it kept getting pushed back. We assumed it might get pushed back one more time due to this extreme shortage of drivers. This program does not help that shortage and, in fact, may make it harder to hire drivers. But they were determined that driver safety is important. So now it’s here and we’re dealing with it, and it seems to be working.
The only problem that we’ve got at the moment is that we still have a severe shortage of drivers. As a matter of fact, it’s not just drivers, it’s employees in general. I haven’t spoken with a distributor yet who says, “I am flush with employees.” I’ve never heard that in the last several years. So, there’s a shortage all the way around, and drivers are just one of them.
And we are tackling that. And the members who have got them and are keeping them will tell you, they’ve had to raise their wage rate. Most of them will tell you that probably the highest-paid person in their organization is their driver. And that’s the only way they’re able to get them and keep them. Because if they don’t pay them, there are so many jobs available that they’ll leave. I think everybody is figuring it out, but if you talk about inflation, this is one of the reasons. The labor rate is going up. The labor rate and the cost of having to pay for that labor, I think is going to be one of our biggest challenges in the coming period.
Rick: The FMCSA is going to do a driver compensation study and try to connect the types of driver compensation to safety. The idea is that drivers who are paid by the mile or paid by the delivery are encouraged to speed or to make other unsafe decisions so that they can make more money. They believe it’s better to pay drivers by the hour so that all of the hours are compensated.
WGT: You just alluded to it; truck drivers are clearly getting paid very well. Some companies are offering $100,000 or more. It’s clearly not a money issue, anymore. So why is the driver position so uniquely difficult to fill?
Mike: I don’t know. I’ve always thought that if I was young again, a driver position would probably be a pretty good position. I enjoy driving on the road and traveling. And now they’re being paid a lot of money. I think, back when the pandemic hit, there were a lot of drivers laid off or weren’t driving because people weren’t buying things and I think they retired or found other work to do besides driving that lets them stay home. There are an awful lot of drivers that have to drive over the road. And that’s not a position that many people like.
Our drivers in our distributorships, those are typically favored positions because you’re usually home every night. That’s one of the things that we used to show as an advantage to somebody coming off the road is that you get to be home every night. And that’s one of the reasons why we don’t pay the same way over-the-road drivers get paid. But now, with the shortages, we are having to pay like an over-the-road position, or they leave and go to the road.
Rick: You asked why is this happening? I think there are three reasons. First, commercial motor vehicle drivers are subject to drug testing. And as marijuana is more accepted in society and is now legal in 33 states, it’s harder to find people who are willing and able to submit to drug testing.
Second, is the Great Resignation. We have had people who, for the past two years, were paid to stay home. Fewer and fewer people want to work now. The labor force participation is lower than it has been in forever. And it’s difficult just to get people back into the workforce.
And the third, and I think this is the biggest reason, is that commercial truck driver as a job is seen as a position with no real future. You look at analyses in the labor force and people don’t see a driving job as a profession with a future because of automation. Autonomous vehicles are eventually going to take over this job. So, if you’re 20 years old and trying to think about what you’re going to do for the rest of your life, that’s probably not something that is going to be available for another 10-20 years.
Sticking with labor issues, there is a House bill now that is targeting the overtime exemption for drivers. They want to get rid of the Fair Labors Standards Act exemption for anybody that is subject to the federal hours of service regulations. And then, the Department of Labor, right now, is looking at overtime eligibility, not for drivers, but for administrative, executive, and professional positions. You’ll recall, the Obama administration tried to increase the salary threshold for persons who would be eligible for overtime. That was challenged in court. Then the election happened, and Trump took office, and the Trump labor department withdrew the rule. The Labor Department is now trying to resurrect that rule. They’re going through a series of public hearings with the idea of coming out with a new proposed rule.
And then, there is the idea of legislation, which has already passed the House, to make it much more difficult to use independent contractors and to try to get almost all workers as employees of various companies and have them subject to withholding and the benefits package. All of these regulatory issues are inflationary, as are the decarbonization trends that we’ve seen. I think these are adding to the inflation that we’re seeing now, which is the highest that we’ve seen in the last 40 years.
WGT: We’re talking about shortages of employees. It’s also back in the news that we’re talking about product and gas shortages. Tom, is that something that you’re seeing?
Tom: We’re seeing helium, of course. And there are still some carbon dioxide shortages, but nothing like we saw during the pandemic.
WGT: The war in Ukraine has been discussed as a driver of the helium shortage. Is that the primary reason for it or just a contributing factor?
Tom: I’m not sure what the primary driver is but I do think it’s a contributor for sure. Also, other rare gases and fluorinated gases come out of that part of the world, and we’ve also seen their supply impacted.
Mike: Sulphur hexafluoride, for instance.
Tom: Yes, sulphur hexafluoride, neon, xenon. The supplies are more limited.
Mike: As far as the atmospherics go, argon, nitrogen, oxygen, I haven’t heard any complaints about those. It’s definitely helium and it’s definitely carbon dioxide.
Rick: I have gotten a lot of calls from members on both of those shortages. More on the legal and contractual issues. In this industry, it’s very common for suppliers to have requirements contracts for their customers. That means that the customer will agree to buy all of their requirements for a particular product or group of products from one vendor. And the vendor will agree to sell all of those requirements to the customer. Well, in these cases, the supply isn’t there. And if you’re obligated to buy from one seller, and the seller doesn’t have enough product, how do you get out of that obligation? And at what point are you relieved from that obligation? It’s not something that I can tell anybody, “This is the absolute time when you’re not obligated.” But, generally, the buyer would have an argument if the seller were unable to perform that the seller has breached, and that the buyer can seek other suppliers. So, that’s something that we have run into both in the helium and CO2 markets.
WGT: Marilyn, what trends are you seeing?
Marilyn: I have seen a slight increase in OSHA inspections, and I’ve heard of a couple of catastrophic events happen in our industry where OSHA was mandated to inspect. It’s very sad when people are seriously injured.
And the main thing that I can say about handling these types of inspections is the need to have records. Whether it’s an injury or a catastrophic incident, the company needs to have proof that it’s working to create and maintain a safe workplace; ex: training records, safety manual and hazard communication program. And you need to train on hazard communication. It’s the first thing they’re going to look at. OSHA doesn’t typically come in. But, you know what? One incident is all it takes.
Currently, OSHA has the National Heat Emphasis Program, which requires all OSHA inspections to include heat illness prevention inspection. Also, inspectors are instructed that if they are driving and see a worksite that may possibly have a high heat environment, they are permitted stop at the worksite and conduct an inspection. So, I think the “stop and inspect” directive opens up a whole new kettle of fish. So, all GAWDA members should find out if they have a heat illness prevention program? And are employees trained on Heat Illness Prevention.
I was just on a call for OSHA’s injury prevention of heat illnesses, and the case OSHA highlighted was interesting: a healthy 35-year-old, working in Buffalo, New York, (not known for its high temperatures) died in 2020. He was working on a roof and died of heat stroke. My point is, if they’re using Buffalo, NY as their example, that puts the rest of the nation on notice.
Rick: There are two things on OSHA Heat, the first is the actual regulatory proposal on the standards for heat illness and injuries. And then the second is this national emphasis program, which is basically doubling the number of heat enforcement actions or investigations that they take over the next three years. That’s a huge labor issue, particularly for companies in the southern U.S.
Marilyn: Another thing that we talked a lot about at SMC is the gases that are used for marijuana extraction. Those are still very prominent. I’m getting a lot of calls about EPA and OSHA PSM.
Mike: The flammable gases. That’s the issue, right?
Marilyn: Correct. The flammable, extraction gases. CO2 is not a big deal. Members are asking if their customers need to have alarms in their grow room where CO2 is used, and I believe NFPA 1 covers the alarm requirements.
WGT: Mike, how about on DOT audits. Any trends you’ve seen emerging?
Mike: I have not seen the DOT audits go up. If anything, I think they might be less than they were previously, mainly because, as Rick said in one of our webinars, the number of new entries that hit. There are over 100,000 new motor carrier entries. And anytime you have a new motor carrier entry, it requires an audit from DOT, according to their own rules. So, I think they are absolutely overwhelmed with how they’re going to handle that. And that has taken away from normal audits to our facilities. Unless there is something bad that has happened like a fatality, or your roadside inspection shows extreme trouble.
Now, I have seen the roadside inspections go up. People do send those to me and ask if how they handle them. I’ve seen those numbers go up. I don’t know if it’s because COVID has become less prevalent and now they’re interacting more on the side of the road. Or maybe it’s because of the warm weather, where they’re able to get out of their vehicles and do more inspections than they would have in the middle of winter. Either way, roadside inspections are definitely up.
WGT: Anything else before we go today?
Marilyn: I would just note that every single agency has a “Help Wanted” sign out. To me, that’s a clear indicator that they intend on being more active. Or they feel the need to have more people in order to be more active. We’ve talked about this before, going back to basics. Get your basic stuff done. Get your groundwork laid. And then you won’t have to worry about an inspection.
