The budget deal passed by Congress and signed into law by the president on Nov. 2, contained major provisions to raise spending caps and the debt limit as well as delay major budget battles until after the presidential election. The package also contained an essentially unnoticed provision that allows the Occupational Safety and Health Administration to increase fines starting Aug. 1, 2016, for workplace safety violations, an important factor to the animal food industry.

OSHA Process for Increased Fines

The provision, which caught both business and labor by surprise, outlines a process that permits the agency to increase penalties for the first time in 25 years. The provision states the White House Office of Management and Budget must issue guidance to implement the new law’s provision by Jan. 31, 2016. OSHA would then be allowed to increase fines to “catch up” with inflation, backlogging since 1990, by issuing an “interim final rule” through next July 1, 2016. This is typically a rulemaking process that does not require an agency to invite public comment before a final decision is made. The rule would go into effect Aug. 1, 2016.

The provision says starting in 2017, OSHA will be allowed to increase fines to keep up with inflation. The law allows OSHA to select a lower fine increase if it chooses and the White House agrees. Whether this will occur, of course, remains to be seen.

The new law doesn’t say anything about the 28 states that run their own safety and health programs and it’s early enough in the process that OSHA has not begun developing any guidance for the states. However, it’s anticipated the new federal fine structure will be required by states, so they will be at least as stringent in their own programs.

Fine Amounts Could Jump by 80 Percent

If OSHA implements the maximum increase allowed, which is the inflation rate from 1990 to 2015 as measured by the Consumer Price Index, then the penalty for violations would jump by more than 80 percent. This means fines for serious violations could increase from $7,000 to almost $12,000.

The highest penalty amount for repeat and willful violations could increase from $70,000 to almost $125,000. In the bigger picture, if this maximum increase were applied to OSHA fines for all U.S. violations in fiscal year 2014, then this past year’s total OSHA nationwide penalties of $143.6 million would have increased to $261.4 million.

It’s useful to point out that OSHA is not required by the new provision to raise its penalties to the maximum; however, the agency may use its discretion on amounts for individual citations.

Labor and Industry Views

While OSHA has been reviewing the changes, prominent labor advocates note the agency’s new penalty adjustment authority means progress. Although simply linking penalty increases to inflation won’t raise fines nearly as high as earlier legislative attempts by congressional Democrats to dramatically boost penalties for worker fatalities. They point out that the average 2014 employer fine for a worker fatality was $7,000, which was ultimately reduced on average to $5,050 upon settlement.

Some industry leaders have noted that increased fines will undoubtedly have a serious impact on business, particularly smaller operations, and will plan to oppose OSHA efforts next year. Other workplace safety legal experts argue that boosting fines for OSHA still keeps them extremely low compared to other agencies like the U.S. Environmental Protection Agency, which imposes a maximum penalty of $270,000 for violating the Clean Air Act and $1 million for tampering with a public water system.

Some business advocates also argue that increasing fines on a per citation basis may be beneficial, as OSHA inspectors may be relieved from having to combine a number of “nitpicky citations” in order to reach higher penalties for employers.

Outlook

AFIA will be closely monitoring OSHA’s activity moving into next year and will keep members abreast of rulemaking and related developments. At this point, it’s likely having a Republican-controlled Congress to block or reverse OSHA’s action next fall will be challenging, as Congress approved the language with this month’s approval of the budget bill. Stay tuned for future AFIA updates.

 

For more information on this topic, please contact Gary Huddleston, AFIA manager of feed manufacturing safety and environmental affairs, at (703) 666-8854.

 

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