President’s Budget Proposal Seeks Enhanced Civil Penalties under OSH Act

The Administration claims that existing civil penalties are so low that “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 that a safe work place is good for their business by maintaining good employee morale, increasing productivity, and in reducing the costs associated with incidents.

This is not the first time that 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 United States.

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 that 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, 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, Deputy Assistant Secretary of Labor for OSHA, Jordan Barab recently stated at a U.S. Small Business Labor Safety Roundtable Meeting that the SBREFA review for modernizing the PSM Standard will begin in May of this year. 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 that its current regulatory structure does not present employers with a sufficient deterrent to non-compliance. Do not be surprised, then, to see the agency increase enforcement efforts, even if civil penalties remain the same.