April 26, 2010
The Obama Administration has consistently sought to increase occupational safety and health oversight by expanding the enforcement activities of the Occupational Safety and Health Administration ("OSHA"). As expressed repeatedly by the Secretary of Labor, Hilda Solis, "There is a new sheriff in town" when it comes to OSHA enforcement.
On April 22, 2010, OSHA took a significant step towards enhanced enforcement by issuing a new directive establishing the Severe Violator Enforcement Program ("SVEP"). The SVEP is a sweeping change to OSHA’s enforcement policy. Its purpose is to identify employers who, in OSHA’s view, have demonstrated "recalcitrance or indifference to their OSH Act obligations," and to subject them to enhanced enforcement attention. The following is a summary of some of the SVEP’s key provisions:
I. Newly Targeted Employers. The SVEP targets employers where an OSHA inspection: (1) following a fatality, or a catastrophe (three or more hospitalizations), results in at least one serious violation cited as willful, repeated, or failure-to-abate; (2) finds two or more "high-gravity serious" violations related to a "High-Emphasis Hazard" cited as willful, repeated, or failure-to-abate (or any combination thereof); (3) finds three or more "high-gravity serious" violations related to Process Safety Management (i.e., involving the potential release of a highly hazardous chemical), cited as willful, repeated, or failure-to-abate (or any combination thereof); or (4) results in an enforcement action that is treated on an "egregious" (per-instance) basis.
There are some important considerations with respect to each of these four categories.
II. Enhanced Enforcement. In addition to substantially increased penalties, the SVEP triggers other enforcement and public relations consequences, including:
(A) Identification of corporate parents and affiliates. A company placed in SVEP status because of an inspection in one facility can expect to have OSHA extensively analyze its corporate structure to identify all facilities of the company and its corporate affiliates that are in the same NAICS or SIC code as the initial SVEP citation. In the past, OSHA’s assessment of a company’s corporate structure has been cursory and inconsistent. Under SVEP, OSHA personnel are specifically required to investigate the corporate structure. This assessment becomes important in the context of the mandatory inspections discussed below.
(B) Investigation of safety "culture." OSHA will investigate the company’s safety "culture," including the extent of the decision-making process that led to the violative condition, company-wide safety programs, insurance company recommendations or independent safety audits that have been "ignored," and management commitment and employee involvement in safety issues.
(C) Mandatory inspections. OSHA will conduct rigorous inspections of the cited facility and other company facilities. First, the SVEP provides for mandatory follow-up inspections at the initial worksite. Second, the SVEP mandates company-wide inspections if the Regional Administrator determines that there are "reasonable grounds" to conclude that a broader pattern of non-compliance exists. If this determination is made, then OSHA will inspect up to 10 of a general industry employer’s other establishments, chosen through the method specified by the SVEP.
(D) Adverse publicity. OSHA will publicize the company’s SVEP status both within the company and to the public. OSHA will send a copy of the citations to company headquarters, copying any unions at the company. OSHA may also send a letter to the company’s "President," expressing OSHA’s concern with company safety, and may seek a meeting among OSHA, company officials, and the company’s unions to address safety and health compliance. Finally, OSHA will issue press releases regarding the SVEP status.
(E) Difficulty in resolving the citation. The SVEP makes settlement more difficult by placing emphasis on, among other things, company-wide agreements, hiring of outside safety consultants, and requirements of interim abatement controls if "final abatement cannot be accomplished in a short period of time."
(F) 11(b) procedures. OSHA states that it will "strongly consider" SVEP cases for 11(b) contempt orders, which are issued by a federal court of appeals compelling an employer’s compliance with a final order of the Occupational Safety and Health Review Commission (which would include both settlements between the company and OSHA as well as adjudications finding the company at fault.)
The impact of SVEP on OSHA enforcement will be far-reaching. All companies, but particularly those in the oil and gas industry, or with citation histories involving High-Emphasis Hazards, should keep abreast of these developments and their potential impact on operations and employee relations.
Gibson Dunn & Crutcher lawyers have significant experience counseling employers to ensure compliance with OSHA requirements, representing employers in OSHA investigations, and representing companies’ interests during the OSHA rulemaking process. If you would like to discuss these or other labor and employment law issues, please contact the Gibson Dunn lawyer with whom you work or any of the following lawyers in the firm’s Labor and Employment Practice Group:
Baruch A. Fellner – Washington, D.C. (202-955-8591, firstname.lastname@example.org)
William D. Claster – Practice Co-Chair, Orange County (949-451-3804, email@example.com)
Eugene Scalia – Practice Co-Chair, Washington, D.C. (202-955-8206, firstname.lastname@example.org)
William J. Kilberg – Washington, D.C. (202-955-8573, email@example.com)
Christopher J. Martin – Palo Alto (650-849-5305, firstname.lastname@example.org)
Jason C. Schwartz – Washington, D.C. (202-955-8242, email@example.com)
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John C. Cook – Washington, D.C. (202-887-3665, email@example.com)
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