In its budget proposal for fiscal year (FY) 2016, the Obama Administration has asked Congress to increase civil penalties for violations of the Occupational Safety and Health (OSH) Act. As the proposal notes, OSH Act civil penalties have been increased only once since the law was passed 44 years ago. In addition, the proposal urges Congress to apply the Federal Civil Penalties Inflation Adjustment Act to the OSH Act, which would increase the civil penalties to keep pace with inflation.
The administration claims existing civil penalties are so low “unscrupulous employers treat them as the cost of doing business.” Of course, the vast majority of employers would disagree with the administration’s view that without OSHA-assessed penalties they have no incentive to maintain a safe workplace. On the contrary, they know a safe workplace is good for their businesses by maintaining good employee morale, increasing productivity and reducing the costs associated with incidents.
This is not the first time the Obama Administration has expressed an interest in increased civil penalties for OSHA violations. In the wake of the April 2013 explosion at an ammonium nitrate distribution facility in West, Texas, President Obama issued an executive order asking six federal agencies to evaluate and improve the safety and security in the chemical industry in the U.S.
In May 2014, a working group from these six agencies released an interim report with preliminary recommendations, one of which was increased civil penalties under the OSH Act. The report included three other recommendations of particular significance to employers. First, it recommended the increase in civil penalties be accompanied by an increase in criminal penalties. Second, it suggested two new letters of interpretation: one revising the scope of the “retail exemption” under the Process Safety Management (PSM) standard and the other revising what chemical concentrations are covered by the PSM standard. And third, it suggested initiating a Small Business Regulatory Enforcement Fairness Act (SBREFA) review in order to solicit small business input on the PSM standard and, ultimately, issue a rulemaking modernizing the standard.
The administration’s request for increased civil penalties in its FY 2016 budget proposal appears to be its strongest endorsement to date of one of the recommendations in the interim report. Additionally, OSHA Deputy Assistant Secretary of Labor Jordan Barab stated at the recent U.S. Small Business Administration Labor Safety Roundtable the SBREFA review for modernizing the PSM standard will begin in May.
These actions could be a sign of movement to come on the remaining recommendations in the interim report. In addition, it could be a harbinger of ramped up enforcement efforts this year. As noted above, OSHA is clearly concerned its current regulatory structure does not present employers with a sufficient deterrent to noncompliance. Do not be surprised, then, to see the agency increase enforcement efforts even if civil penalties remain the same.
The proposed spending in OSHA’s FY 2016 budget certainly seems to confirm this. In OSHA’s words, “The FY 2016 budget request will enable the agency to implement enforcement and whistle-blower initiatives designed to have a far-reaching impact.”
According to the budget, OSHA would receive $592.1 million, a 7-percent increase from OSHA’s proposal the previous year. According to the budget, a majority of the requested increase would be allocated to enforcement activities. OSHA’s proposal also asks for the addition of 90 new positions. Of those positions, 60 would be dealing with enforcement activities. These requests are more than likely connected to OSHA’s new reporting rule, which will no doubt lead to an increase in OSHA inspections. The new reporting rule increased the number of reportable injuries and illnesses to all work-related hospitalizations, amputations and eye loss. This is in addition to employee fatalities, which employers will still need to report within eight hours of their occurrence.
For more information, contact Mark Dreux at (202) 857-6405 or visit www.Managing-OSHA.com.