Occupational Safety and Health Administration Announces Stringent Enforcement Policy

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.

  • With respect to the first category (fatality/catastrophe), OSHA’s authority to cite a violation as a repeat violation is extremely broad.  If one citation in any other facility in the country has been affirmed as to a particular safety and health issue, and another citation is issued in the next two years with respect to the same or similar issue, it can be issued as a repeat citation.  It will only take one repeat citation in the context of a fatality or catastrophe to trigger SVEP status.
  • The second category (High-Emphasis Hazards) is novel, and is the most troubling.  The SVEP creates a list of targeted regulations giving rise to High-Emphasis Hazards.  (Generally, the regulations on this list correspond to active National Emphasis Programs.)  This list of targeted regulations is both broad and ambiguous, as illustrated by two examples.  (1) The list includes OSHA’s regulations for walking and working surfaces, control of hazardous energy (LOTO), machine guarding, and scaffolding.  The conditions covered by these regulations are pervasive, difficult for employers to police, and easy for OSHA to cite.  (2) The list includes combustible dust.  Although there are some industry-specific combustible dust regulations (e.g., grain dust), OSHA does not yet have any generally applicable combustible dust regulation.  Given OSHA’s view that combustible dust hazards are widespread and can be cited as a "recognized hazard" under OSHA’s General Duty Clause, we expect a significant expansion of the SVEP under this category.
  • The third category (Process Safety Management, or "PSM") is also novel, but unsurprising following OSHA’s aggressive pursuit of the oil and gas industry, including the recent issuance of an $87,400,000 penalty primarily under the PSM standard.  In light of the enormous complexity and cost of compliance with PSM–and OSHA’s pattern of second-guessing good faith abatement measures–this category will also inflate the number of employers pursued under the SVEP.
  • The fourth category (per-instance) has been bolstered by an April 16, 2010 decision of the U.S. Court of Appeals for the District of Columbia Circuit affirming OSHA’s authority to issue per-instance (employee-by-employee) fines to employers.  Nat’l Ass’n of Home Builders v. OSHA, No. 09-1053 (slip op.) (D.C. Cir. Apr. 16, 2010).  Because the Court determined that OSHA’s ability to "determine units of prosecution" is an inherent part of its rulemaking and enforcement authority, the decision is not limited to the substantive respirator standard at issue in the case, but rather applies to per-instance citations under any current or future OSHA standard.  This case is significant in that it permits OSHA to sidestep a significant statutory limitation on its enforcement authority:  the size of its fines.  Penalties for serious violations of the OSH Act are limited to $7,000, and penalties for repeat and willful violations are capped at $70,000.  These amounts were last increased in 1990, and are not indexed for inflation.  OSHA views these fines as too small to deter unsafe working conditions and believes that employers can and do pay them as the cost of doing business.  Assessing per-instance penalties allows OSHA to multiply its existing $7,000/$70,000 maximum over tens or hundreds of employees or instances, thereby producing some of the enormous fines recently assessed by OSHA.  We expect that this decision will further encourage this enforcement-minded Administration to increase the issuances of such large fines, particularly in connection with its new authority under the SVEP.

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 LLP

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, [email protected])
William D. Claster – Practice Co-Chair, Orange County (949-451-3804, [email protected])
Eugene Scalia
– Practice Co-Chair, Washington, D.C. (202-955-8206, [email protected])

William J. Kilberg – Washington, D.C. (202-955-8573, [email protected])
Christopher J. Martin – Palo Alto (650-849-5305, [email protected])
Jason C. Schwartz – Washington, D.C. (202-955-8242, [email protected])
Elizabeth C. Watson – Los Angeles (213-229-7435, [email protected])
John C. Cook – Washington, D.C. (202-887-3665, [email protected])

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