Judge Blasts ‘Reckless’ OSHA Action, Overturns Citations Against Maritime Firm

A judge in throwing out OSHA’s citations against a Texas shipbreaking operation criticized the agency in unusually strong language as he reversed the penalties, finding agency officials had acted “recklessly” by misrepresenting their intent to abide by an agreed-upon 60-day abatement period stemming from an earlier round of inspections and lengthy litigation.

The case involving International Shipbreaking Ltd. (ISL) came before the Occupational Safety and Health Review Commission when the company complained that OSHA had, contrary to an agreement, used an inspection of the site shortly after executing the deal to improperly issue new citations.

Administrative Law Judge Patrick Augustine invoked a legal principle rarely exercised against government agencies know as equitable estoppel, which can be ordered to stop an enforcement action under specific circumstances including that an agency breached the terms of an agreement. Augustine vacated the newer citations, with his order becoming a final commission order in July. OSHA did not ask for discretionary review of the judge’s decision.

Augustine found that OSHA’s enforcement action could be rejected under estoppel doctrine, where the Supreme Court has held that estoppel may be appropriate when a court finds that “public interest in ensuring that the Government can enforce the law free from estoppel [is] outweighed by the countervailing interest of citizens in some minimum standard of decency, honor, and reliability in their dealings with the Government.”

The judge wrote that OSHA “recklessly, if not intentionally, misrepresented its intent to abide by the terms of the Agreement” and OSHA “has fallen short of any standard of decency, honor, or reliability in its dealings” with the employer, because of several aspects of the case including a claim by OSHA, debunked by the judge, that inspectors only coincidentally re-inspected the facility after the abatement deal had been executed.

It appears the ISL dispute will not go any further since the judge’s decision became a final order without being appealed to commissioners. An agency official told Inside OSHA Online in an email Tuesday that “OSHA did not file a petition of discretionary review, therefore, cannot proceed in the Court of Appeals.”

The long-running friction between OSHA and ISL dates at least to 2011 when inspectors conducted two inspections of the employer’s shipbreaking operations, which resulted in the issuance of two citations and penalty notifications, alleging personal protective equipment, fall protection, fire prevention, and electrical violations, among others.

The parties over the next year and a half engaged in litigation and settlement talks, which ultimately resulted in an agreement dated June 27, 2013, according to background in the judge’s order. The company agreed to several provisions in exchange for OSHA withdrawing all of the citations from 2011.

The company promised under the agreement that within 60 days of signing the agreement it would: (a) institute an electrical safety check program; (b) designate a person to inspect outlets and the outer insulation of cords for tears, exposed wires, etc.; (c) have an electrician, whose certification is from an American state or territory, on staff; and (d) institute an “assured equipment grounding conductor program” such as the one found in the construction standard.

The Solicitor’s Office and counsel for ISL executed the agreement on behalf of their clients, and although neither the OSHA area director nor assistant area director signed the document, both admitted that they had participated in the settlement process and proposed some of the language, according to the judge’s decision.

OSHA, two weeks after the parties executed the agreement and two days prior to a judge’s approval of the document, initiated the first of two new inspections of the ISL shipbreaking operations. OSHA claimed those probes were conducted pursuant to the National Emphasis Program (NEP) on Shipbreaking.

The agency as a result of the July 2013 inspections issued two new citations, alleging seven violations of the OSH Act. However, each of the newer citations were based on alleged violations of the electrical standards, which are not listed as one of the 21 items of “Inspection Focus” in the NEP, the decision notes.

ISL during informal settlement talks addressed its disagreement with OSHA issuing electrical citation items during the agreed-upon period of abatement for previously cited electrical violations, but OSHA determined that the issuance of the electrical citation items was not in error, leading to the notice of contest before the review commission. — Christopher Cole (ccole@iwpnews.com)