Commission Agrees to Review Judge's Ruling That Cut $2.8 Million BP Fine to $35,000

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By David Schwartz  

Sept. 18 --The Occupational Safety and Health Review Commission Sept. 16 accepted for review an administrative law judge's ruling in a case against two subsidiaries of BP Plc, following a petition from the secretary of labor (Sec'y of Labor v. BP Prods. N. Am. Inc., OSHRC, No. 10-0637, 9/16/13 (direction for review)).

In an Aug. 12 decision and order, Administrative Law Judge Sharon D. Calhoun affirmed penalties totalling $35,000 against BP in the case, or about 1.2 percent of the $2,870,000 in penalties proposed by the secretary (43 OSHR 799, 8/15/13).

The secretary filed a petition for discretionary review with the commission on Sept. 5, and Commissioner Cynthia L. Attwood directed the case for review.

Initial Fines $3 Million

In September 2009, the Occupational Safety and Health Administration inspected a refinery operated by BP Products North America Inc. in Oregon, Ohio, a suburb of Toledo. Another BP entity, BP-Husky, maintained a business interest in the refinery, which was built in 1919, and was also cited.

The inspections centered around specific pressure vessels and piping equipment at the plant.

OSHA initially issued three citations and penalties totalling over $3 million to BP Products. Prior to participating in a 19-day hearing in June 2012 before the administrative law judge, the parties settled citations 1 and 3. On the first day of the hearing, the secretary of labor withdrew parts of the second citation. The case before Calhoun still consisted of 41 items, some with multiple parts, and a total penalty of $2,870,000.

In her decision, the administrative law judge vacated most of the citations the secretary had proposed, while downgrading the ones that remained from willful to serious. Calhoun criticized OSHA for, among other things, imposing “a requirement on employers not found in the cited standards” and “attempting to enforce as mandatory the recommended practices” found in a document published by the American Petroleum Institute.

'Prompt, Authoritative Resolution' Sought

In the petition for discretionary review, the secretary said that the case touches on OSHA's Process Safety Management of Highly Hazardous Chemicals (PSM) standard (29 C.F.R. 1910.119).

“Commission review of the ALJ's decision is needed on issues at the core of the PSM standard, including what constitutes recognized and generally accepted good engineering practices” (RAGAGEP), the secretary wrote, adding, “Prompt, authoritative resolution of these issues is necessary so that OSHA may continue to enforce the PSM standard in the way that best protects employees from catastrophes, such as the explosion that occurred at the Texas City Refinery in 2005.”

That explosion, at a BP plant, killed 15 and injured at least 80 (35 OSHR 273, 3/31/05).

The secretary wrote that Calhoun should not have vacated certain citations because, among other reasons, BP Products had failed to adhere to RAGAGEP and had failed to assure that the company's own process hazard analysis team's recommendations were resolved quickly.

The secretary also wrote that Calhoun had mistakenly downgraded citations from willful to serious even though it had not fixed known problems in some cases for 15 years or more.

The secretary took issue with Calhoun's characterization of draft audit reports prepared by a safety consultant as “voluntary self-audits,” saying that BP Products had hired the safety consultants to do the work to comply with OSHA standards, therefore they were not voluntary audits.

In her opinion, Calhoun had said use of self-audits as evidence was in blatant contravention of OSHA policy, although the judge added that their use by OSHA in this case was not what prompted the rulings.

BP Products filed a statement in opposition to the secretary's petition, which included a conditional-cross petition for discretionary review.

Gregory C. Dillard, with Vinson & Elkins LLP in Houston, who is representing BP Products, told Bloomberg BNA Sept. 18 that the document says, “Basically, we oppose the commission reviewing this case, but just in case it does, here are three issues to look at.”

The first of those issues was that Calhoun should have vacated those items that she affirmed on the grounds that BP Products adopted interim measures to maintain safe operations until permanent fixes could be implemented. The second was that Calhoun should have granted BP Products's motion requesting clarification on what abatement measures were needed. Finally, BP Products argued that when Calhoun downgraded citations from willful to serious, she should have combined them and, therefore, reduced penalties still further, in keeping with what the company says is long-standing OSHA policy of only citing similar alleged violations multiple times when they are characterized as willful.

“This action by the review commission was expected,” Dillard said. “We believe that the commission does not have grounds to reverse, and we expect it to affirm Judge Calhoun's well-reasoned decision.”

In its direction for review, the commission said it would issue a briefing order to the sides, explaining what issues it would like to see addressed.

 

To contact the reporter on this story: David Schwartz in Washington at dschwartz@bna.com

To contact the editor responsible for this story: Jim Stimson at jstimson@bna.com


The administrative law judge's decision, the secretary of labor's petition for discretionary review, BP's statements in opposition and conditional cross-petitions and the commission's direction for review is available at http://tinyurl.com/ky525cb.