November 3, 2015

OSHA Gets Congressional Nod To Raise Maximum Penalties Based On Inflation

House and Senate lawmakers passed a little-noticed measure that will effectively let OSHA hike maximum penalties by roughly 81 percent, in order to catch up with inflation since 1990, as part of their final budget compromise last week.

The legislative change means OSHA has the congressional go-ahead to issue an implementing rule that amounts to an increase in penalties for alleged willful, repeat and serious violations of OSHA standards. Safety and health activists have long sought such an increase. Annual adjustments going forward are also established.

Observers note that the agency does not always propose fines at the maximum levels, but has done so with more frequency under the Obama administration. OSHA has also used internal policy changes to increase overall penalty amounts without the need for legislation. That was achieved primarily by limiting penalty reductions and more closely studying employer histories when considering proposed fines.

Lawmakers inserted language into the sweeping budget deal that provides a fiscal framework for appropriators through early 2017. The section, called the Federal Civil Penalties Inflation Adjustment Act, amends a 1990 law of the same name to provide for a “catch up” adjustment and allow for annual adjustments based on cost-of-living increases.

OSHA’s maximum penalty for an alleged serious violation is $7,000; and for alleged willful and repeat violations is up to $70,000. The catch-up adjustment from 1990 levels will allow up to about $12,700 and $120,700 in proposed penalties by category, respectively, once the implementing rule takes effect.

The budget agreement, signed by Obama on Monday, directs that the catch-up adjustments occur by Aug. 1, 2016.

Safety and health advocates have long argued that increasing OSHA’s penalties would have a strong deterrent effect on employers. One open question, however, is how long it might take for OSHA to issue the rule and whether any controversial policies will be included, for example to codify the administrative changes to penalty policy that occurred five years ago.

One attorney and OSHA expert says the increases prescribed in the new law are significant. “That’s a big increase. I assume OSHA will put the full amount in effect,” the source says. “Some groups will say that’s excessive.”

OSHA will also likely put the rulemaking at the front of its priorities, the source suggests.

An OSHA spokeswoman said in an email Tuesday that with regard to timing “the agency is still studying the path forward on this issue.”

The bill directs the agency to promulgate the changes through an interim final rulemaking, which allows stakeholders to comment on the regulations while also fast-tracking them. An attorney says it would be highly unlikely for a court to second-guess the agency, given the clear legislative text. The situation might be different if the agency tries to exceed the intent of Congress, the source notes.

The act does contain exceptions language, however, that could allow stakeholders to influence the catch-up adjustment. The agency head could, after issuing the rule and accepting comments, adjust the amount of a civil monetary penalty by less than what otherwise would be required if determining that “increasing the civil monetary penalty by the otherwise required amount will have a negative economic impact;” or “the social costs of increasing the civil monetary penalty by the otherwise required amount outweigh the benefits;” and the Office of Management and Budget director agrees.

The initial increase in a civil monetary penalty must not exceed 150 percent of the penalty amount when the bill was enacted. OMB is also directed to issue guidance to OSHA and other affected agencies every year as to how the adjustments will be carried out. Agencies will be required to submit financial reports of the adjustments, and their compliance with the new law will also be subject to Government Accountability Office review. — Christopher Cole ()


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