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New criteria will be used to determine whether employers qualify for “corporate-wide settlement agreements” with the Occupational Safety and Health Administration under a directive issued June 23 that expand the types and scope of violations eligible for the program.
The new directive, CPL 02-00-152 Guidelines for Administering Corporate-Wide Settlement Agreements, is the first major overhaul of the program in 20 years, replacing the old directive, CPL 02-00-090.
In the past, corporate-wide settlements applied primarily to companies that had violations at multiple locations and that faced substantial penalties. The new guidelines lower the penalty threshold.
While the old program focused on employers cited for “egregious” violations, the new program expands the guidelines to include:
• high-profile enforcement cases such as fatalities, “significant” penalties, Severe Violator Enforcement Program citations, and process safety management cases;
• recordkeeping deficiency cases where there are systemic deficiencies or extensive problems; and
• cases where “high-gravity” serious citations were issued.
The old guidelines restricted settlements to problems that resulted in citations. The new guidelines allow OSHA officials to consider safety shortfalls that did not produce citations.
“[W]hen appropriate, OSHA shall consider going beyond the subject of the citations to include additional safety and health program enhancements in the [agreement], especially when compliance problems identified in the inspection may be indicative of a broader pattern of noncompliance,” the new directive said.
Also, the directive sets a two-year limit on the length of settlement agreements. The old directive had no time limit. Under the new guidelines, in “limited circumstances” an agreement can be renewed at the request of the company and with the approval of the national OSHA director of enforcement and the regional directors overseeing compliance.
Unchanged from the old directive is the policy that federal OSHA cannot enforce the agreements in states with their own safety agencies. However, OSHA will inform states of any settlement agreements.
Ed Foulke, who served as assistant secretary of labor for occupational safety and health from 2006 to 2008 and is now a partner with Fisher & Phillips LLP, told BNA June 24 that the two-year limit could make the settlements more attractive to companies if they are concerned about entering an open-ended agreement with OSHA.
Foulke noted that while he was at OSHA, the agency asked several companies if they wanted to end agreements that had been ongoing for several years. “We found that some companies wanted the agreement to stay in place because it helped them,” he said.
One provision Foulke said he was glad did not change was that requesting a corporate-wide settlement is voluntary for the employer.
Mark Savit, an industry attorney with Patton Boggs LLP, expressed caution about encouraging employers to accept a corporate-wide settlement under the guidelines. “This is basically [OSHA] getting in bed with the employer and supervising what is going on,” he told BNA June 24.
Settlements with OSHA typically involve the company and OSHA agreeing in advance that the employer's efforts to abate the safety problems are acceptable, Savit said. The corporate-wide settlement leaves open the potential for OSHA to come back after the settlement is signed and decide the company should change its abatement measures.
OSHA officials were not available to comment. In February, when OSHA's fiscal 2012 budget request was presented to Congress, an agency statement said the revised directive, still being drafted, should expand the field of eligible employers. The “directive will emphasize use of these agreements to smaller multi-site employers and to lower penalty cases,” the statement said.
OSHA also saw the new guidelines as saving the agency money because it could negotiate enforcement of a single settlement instead of pursuing settlements at several locations of the same company. “Emphasizing corporate-wide or enterprise-wide enforcement through expanded use of corporate-wide settlement agreements will be a critical means to leverage OSHA's limited resources,” the budget request said.
OSHA's largest corporation-wide settlement was signed in August 2010 when BP Plc agreed to pay a $50.6 million fine for process safety violations related to an explosion at its Texas City refinery that killed 15 workers in 2005 (40 OSHR 693, 8/19/10). BP also promised to spend $500 million improving safety at the refinery and accepted what OSHA officials called “an unprecedented level of oversight” related to process safety, including submitting quarterly safety reports to OSHA, allowing third-party experts to evaluate whether the company is meeting the terms of the agreement, meeting regularly with OSHA's area director and annually with the agency's national office, and submitting to OSHA inspections.
Other large companies accepting corporate settlements in the past decade, according to OSHA, include Raytheon Aerospace in 2003, Manor Care Health Services in 2002, and Beverly Enterprises Inc. in 2002.
By Bruce Rolfsen
The new directive is available at http://www.osha.gov/OshDoc/Directive_pdf/CPL_02-00-152.pdf .
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