When a massive tank of sulfuric acid exploded at a Delaware refinery, boilermaker Jeff Davis’ entire body was literally dissolved, leaving no remains. The penalty assessed against the refinery by the Occupational Safety and Health Administration for an unsafe workplace: $175,000.
About a million gallons of the acid also spilled into the Delaware River, killing 2,400 fish and 240 crabs. The penalty for violating the Clean Water Act: $10 million.
The story of the 2001 accident was recounted by OSHA head David Michaels to an audience of steelworkers last month. “How do we explain to Jeff Davis’ wife Mary and their five children that the penalty for killing fish and crabs is so much higher than the penalty for killing her husband and their father?” he said.
OSHA’s hands are tied by statute when it comes to assessing fines, making the agency in some ways a toothless watchdog. The maximum penalty per serious workplace violation — one where “a substantial probability of death or serious physical harm could result” — is $7,000, and Congress seems unlikely to raise it anytime soon.
For what it lacks in bite, OSHA under the Obama administration has tried to make up for in bark. “OSHA is doing things differently,” Michaels said in an interview, citing “refocused enforcement and refocused outreach” as top priorities, along with pushing for a new injury- and illness-prevention program. “We’re trying to make a long-term change in the way we think about workplace safety and health.”
Perhaps the most controversial tactic is what Michaels has called “regulation by shaming” — issuing strongly worded press releases condemning companies for wrongdoing. The public relations hit becomes a penalty in its own right, one with potentially more sting than a four- or five-figure fine, especially for big companies. A sampling of recent releases gives a sense of the tone, with phrases like “truly shocking,” “completely unacceptable,” “workers in grave danger,” “blatant disregard,” “inviting tragedy” and “no excuse.”
Management-side lawyers are crying foul. “They’re looking to make companies a poster child for some agenda,” said James Lastowka, the head of McDermott, Will & Emery’s OSHA practice. “They don’t need hostile press releases to leverage their enforcement actions. It’s counterproductive, and engenders a lot of ill will, even among the most safety-conscious companies.”
Marc Freedman, executive director of labor law policy at the U.S. Chamber of Commerce, agreed. “Clearly, the goal is to create an impact from the press releases to challenge or convince other companies to put their affairs right,” he said. The problem is that often, upon further investigation and review, many of OSHA’s initial charges may be withdrawn or downgraded, he said. “There’s no attempt to correct the record after the press release comes out. No one ever hears that side of the story. They’re truly pushing guilty-before-innocent type of thinking.”
For example, OSHA in February 2010 issued a press release detailing citations against Guam painters BME & Sons for failing to protect its workers from falls. The proposed penalties were $51,200. “These violations occurred because BME & Sons failed to follow basic safety and health requirements despite repeated citations in the past,” OSHA regional administrator Ken Nishiyama Atha said in the release. The company appealed the citations to the OSH Review Commission, which in March 2011 slashed the fine 85 percent to $7,000. Two of the seven violations were withdrawn, one was downgraded and one was vacated.
Of course prior administrations also issued stern press releases when employers were cited for safety and health violations. The difference, lawyers say, is that OSHA nowadays does it more often and more aggressively. “It’s a question of degree,” said Jonathan Snare, a partner at Morgan, Lewis & Bockius who is based in Washington and served as OSHA’s acting head from 2005 to 2006. “I definitely see a difference.”
Michaels countered, “The tone hasn’t changed, except with those employers who have gone beyond what is acceptable and are endangering workers,” he said. “If we find significant hazards and workers are hurt, we’re not going to keep it a secret.”
Moreover, it’s effective; he said some industry executives have told him “the press releases have a big impact — more than the fines.”
From the government’s point of view, the end result is one more incentive for companies to make their workplaces safer. Or, as Michaels put it, “We have a range of tools to make bad employers better.…We know this works.”
OSHA is a small agency — about 2,300 inspectors — with a big mission: to ensure safe and healthy workplaces for 130 million people. The press releases are part of Michaels’ overall strategy to make OSHA “look big.” He likens it to what you do if you’re hiking and meet a mountain lion: “Make yourself look as big as you can.”
An epidemiologist, Michaels was a professor of environmental and occupational health at the George Washington University School of Public Health before he was confirmed by the U.S. Senate to head OSHA in late 2009.
On his watch, there has been little change in the number of workplace inspections — about 40,000 a year. What has changed are the consequences when infractions are found. OSHA’s penalties may typically be modest, but Michaels seems determined to maximize what’s allowed by statute.
In 2011, OSHA brought 215 “significant” cases, in which total penalties topped $100,000, compared to 107 such cases in 2007, according to a presentation by Richard Fairfax, OSHA’s deputy assistant secretary, at an American Bar Association meeting in March. The average penalty per serious violation has also spiked, doubling in the past year from $1,053 to $2,133.
The increase is the result of OSHA’s new penalty enhancement policy, which went into effect in October 2010 and changed how OSHA applies penalty adjustment factors like employer size and good faith. Also, the time frame for considering an employer’s history of violations to determine a penalty increased from three years to five. In addition, OSHA created the Severe Violator Enforcement Program, which imposes tougher sanctions on businesses with repeat, willful violations.
“The primary purpose of fines is deterrence, not punishment,” Michaels said. “The object is not just to impact the employer we fine, but so other employers in the industry or region are aware of the fine.”
The new policy hit small employers the hardest. Last year, 10.7 percent of OSHA citations were contested by employers, up from about 8 percent in 2010, Michaels said, adding that protests from small businesses were largely responsible for the increase. OSHA on April 1 put in place a new provision to give businesses with 25 or fewer workers a bigger break on penalties, and Michaels said he expects the contest rate will decline in the future.
For many employers, though, the penalties themselves “are not the big cost,” said Ford & Harrison partner Terry Price, who practices in Birmingham, Ala. “The big cost usually involves abatement — the money to correct what OSHA says is wrong. That may require a large capital expenditure.”
IN THE PIPELINE
Aside from enforcement, OSHA’s other primary power is rulemaking — setting workplace health and safety standards and limiting exposure to toxic substances. Under Michaels, OSHA’s rulemaking activity to date has been limited, but the business community is alarmed at what’s in the pipeline — a new illness and injury prevention program, dubbed I2P2.
The idea, according to an OSHA white paper issued in January, is to “help employers find and fix workplace hazards before workers are hurt.” The agency points out that, although workplace fatalities have declined 60 percent since the Occupational Safety and Health Act was signed into law in 1970, each day more than 12 workers still die on the job. “An enhanced focus on prevention is needed to bring these numbers down,” according to OSHA.
Fifteen states already require employers to implement and maintain written injury- and illness-prevention programs. Michaels wants to make the requirement nationwide. “It’s not burdensome,” he said. “It makes sense. It’s do-able. It’s not costly, it saves money and it saves lives.”
But lawyers are concerned that in practice, it would amount to “a citation mill for the agency,” said McDermott partner Arthur Sapper. He said his experience in California and Michigan, two states that require plans, has been that employers are cited for plan deficits when inspectors “couldn’t find any actual safety and health violations…but feel pressure to cite something.” The result, Sapper said, is “very little improvement in on-the-ground safety and health for employees.”
Susan Wiltsie, a counsel at Hunton & Williams’ Washington office, agreed. “It sets a company up for ‘gotcha,’ ” she said, adding that program requirements “can be so broad that employers don’t know what they need to do.” Michaels responded that OSHA will take “lessons from states — what we can learn from them about how to do it right.”
On Jan. 6, OSHA notified the White House and the Small Business Administration by letter that it planned to convene a small business advocacy review panel, the first step in the rulemaking, within the next 60 days — that is, by March 6. The agency has not yet done so.
Michaels was vague when pressed about the delay. “It’s hard to predict the timing of the regulation,” he said, but called the program “absolutely a priority.”
Also stalled is a rulemaking that updates standards for exposure to crystalline silica — tiny particles of quartz, sand or other minerals that can cause lung cancer and other diseases when inhaled. The proposed rule has been under review at the White House Office of Information and Regulatory Affairs (dubbed “where regulations go to die” by watchdogs) for more than a year.
Michaels said OSHA is “working with the White House” on the rule, evaluating the “costs, benefits and economic impact.”
Some on the left have been disappointed by the Obama administration’s stance. Ralph Nader, in a March 28 open letter to the head of the AFL-CIO, said Obama has “betrayed OSHA.” He called Michaels “an excellent head of OSHA…[who] cannot get White House approval for issuing long-overdue standards or strengthening weak and outdated standards such as the woefully inadequate silica rule.”
Another, more modest, pending rulemaking revises certain injury and illness reporting requirements. Under current rules, employers must tell OSHA within eight hours if three or more workers are hospitalized as a result of the same workplace incident. The new rule would mandate that employers report every worker inpatient hospitalization as well as amputations.
A slew of negative comments greeted the proposal. It’s “ambiguous and unrealistic,” said the Retail Industry Leaders Association. It would “put undue hardship and burden on businesses,” said the National Association of Home Builders. The Shipbuilders Council of America complained it would increase reportable incidents by 10,000 percent, and said it would be “an almost impossible task” for OSHA to process and respond to the information.
Michaels said the agency is reviewing the comments, and that “we certainly have a plan to triage the reports and act on the ones that require immediate response.” He also put the 10,000 percent increase in perspective, noting that OSHA currently gets just two reports a month on average of worker hospitalizations.
If nothing else, the response to the proposed rulemaking illustrates the competing pressures OSHA faces. As Snare of Morgan Lewis put it, “The agency has a great and noble mission, but everything OSHA does is controversial.”
Jenna Greene can be contacted at firstname.lastname@example.org.