Assignment 10
OSHA ENFORCEMENT
Prepared for:
Michael Guth
Faculty Mentor
Financial Economics Homepage ||
Attorney at Law Homepage
Prepared By:
Peter H. Rast
White Collar Crime
CJ5009
Week 13
The Beginnings of Regulation
Perhaps the most wrenching social
changes experienced in the United States occurred during the Progressive Era of
approximately 1890 to 19181. Although the United States has
certainly endured upheavals (the Revolution, the Civil War, the War of 1812),
the Progressive Era saw tremendous social reaction to the rapid
industrialization begun before the Civil War. Although the reaction of the
Progressives was largely social and governmental, violence was not unknown.
As an example of the rapidity of
industrial and economic growth, the nations GNP grew from about $11 million in
the mid 1880s to $84 million (in constant dollars) by the end of the Great War.
Automobile ownership grew from about 8,000 in 1900 to about 8 million by 1920.
In 1890, 35% of the population lived in cities; by 1920, this proportion had
shifted to 51%. Industrial giants such as US Steel and International Harvester
grew rapidly. The National Refiners’ Association became the first OPEC.
During this period, self employment
declined in relative importance as more people worked for large corporations;
small and medium size businesses experienced significant growth, as well
(particularly those that had special skills or engaged in small batch
manufacture). It appeared to many that one’s security was no longer in one’s
own hands, but in the hands of a few, disinterested managers and executives.
Reacting to the social upheaval occurring at the time, workers, including
farmers, formed associations such as unions and resisted the inevitable changes
in a number of ways. Industrial bureaucracy followed industrial concentration,
encouraging the impression that one had lost his power of self-determination.
Union and anti-union activities often resulted in violence.
Because many individuals and
organizations formed at the turn of the 20th century felt relatively
powerless against what was perceived as corporate corruption, corrupt
government, political bosses, growing industrial concentration, and special
interests, Americans began asserting pressure on government at all levels to
address such problems. The recession of 1893 and 1894, the deepest to date,
seemed to thrust simmering discontent into the open and call social Darwinism
and laissez-faire capitalism into question.
The Progressive Era saw the Social
Settlements movement, the first sweatshop laws, compulsory education, child
labor laws, and the first juvenile courts. This period saw agitation for
progressive taxation, popular election of Senators, state regulation of
business, and government ownership of some businesses. Until the turn of the
century, such progressive agitation was limited largely to local and state
levels. The federal government hardly took notice, except to break strikes.
In 1890, the passage of the Sherman
Act 2, acknowledging that a certain amount of government
intervention was warranted, dealt with certain monopolistic practices. However, with the assassination of President
McKinley and the ascension of
Theodore Roosevelt to the Presidency, the federal government began to take
greater notice. Roosevelt continued an era of expanding trust-busting,
anti-trust legislation, and regulation. The first administrative agency formed
as part of this trend was the Interstate Commerce Commission (1887).
Interestingly, it was the first agency disbanded (1996).
The formation of an alphabet soup of
regulatory administrative agencies and regulations followed. Although there
were administrative agencies in Washington’s administration, the difference
before about 1890 and after is primarily one of scale and scope3. (The Postmaster General’s office under Washington consisted of three people
and the Patents and Trademarks office wasn’t much bigger.) The trend of agency
formation accelerated during the Roosevelt (FDR) years in response to the Great
Depression. Although some depression era agencies were rightfully declared
unconstitutional4, agency formation continued with
Supreme Court acquiescence after Roosevelt’s threatened
court packing. The agencies formed since the ICC have quasi-legislative,
enforcement, and judicial powers and considerable authority over economic
activities. It is probable that most are and exercise unconstitutional powers,
however, they are a fact of economic life and must be dealt with.
Interestingly, many industries did
not actively oppose regulation, but sought to control it to achieve their own
ends5. Perhaps this is partly due to the difficulty in defining
the underlying issues and the lines of interest not being clearly drawn. For
example, mining safety regulation was encouraged by mining disasters. However,
the effected mining companies saw safety regulation as a means to equalize
safety costs across the industry thereby decreasing and controlling
competition. Minimum wage laws are often criticized as anti-competitive devices
which served primarily to raise wages in large corporations to the level of
wages in small business6. Workmen’s compensation laws have
similar etiology. American
industry played a major roll in the development of regulation, but may have
done so primarily as an anti-competitive and control device.
Administrative Law
Administrative law is divided into
three parts7:
clause of the US Constitution8. However, the issue of
unconstitutional delegation of legislative authority to the executive branch
has been and can still be an issue. Basically, the Supreme Court has decided
that to be constitutional, a statute delegating legislative authority must be
sufficiently clear so that it can be determined that an agency’s administrator
adhered to the standards set by Congress in the act under examination and did
not exceed granted authority9.
Agencies typically have
investigative powers. While drafting regulations, agencies may hold hearings,
accept comments, order the production of relevant documents, and subpoena
witnesses. The scope of such authority is determined by reference to an
agency’s enabling statutes and legislative intent.
An agency’s quasi-legislative
authority to make rules is also governed by its enabling statute. An agency may
issue a broad policy statement or it may issue precise prescriptions and
proscriptions, but these must be within its clearly defined statutory
authority.
An administrative agency often has
adjudicatory functions. An agency can determine that a violation of its
regulations has occurred and conduct administrative proceedings which might
result in fines, remedial orders, or other remedies. In these proceedings,
witnesses may be called and evidence introduced, following which the
administrative law judge will make findings of fact and recommendations to the
agency’s governing body. Findings of fact are usually binding, but
recommendations are not and may be significantly altered by the governing body
in its final ruling. Note that here too is a problem with unconstitutional
delegation of authority to an administrative agency.
Agency rules, regulations, and
administrative actions are normally subject to judicial review, although this
is not always the case. Review is authorized by statute or by a finding of
public interest. Although agency findings of fact are usually not reviewable,
statute interpretation is. The DC Court of Appeals may consider both areas in
its deliberations, but deals primarily with matters of law and legislative
intent, accepting the law judges findings of fact.
Administrative agencies may be classified
by subject matter. Some agencies are concerned with economic regulation (SEC,
FCC), some with welfare matters (SSA, VA), and others manage public resources
(BLM, USFS). Some agencies regulate single industries (FCC, FMC, FDA) and
others regulate business in general (SEC, FTC).
Agencies can also be distinguished
as independent or not. The Federal Reserve is an independent agency, but the
Social Security Administration is not. OSHA is a dependent agency within the
Department of Labor.
One interesting way to classify
agencies is as friendly or unfriendly, depending on the level of influence an
industry has on an agency. The ICC was an agency unfriendly to industry
because, by law, industry members could not sit on the commission. Many state
agencies, however, have industry members that make up most or all of their
respective boards and so can be classified as friendly to the industry. For
example, six of its members of the California Board of Optometry are required
to be licensed optometrists. The licencing boards for private investigators in
Nevada and Oregon are dominated by industry professionals.
OSHA - Occupational Safety and Heath
Administration
This is OSHA’s mission statement:
OSHA's mission is to assure the
safety and health of America's workers by setting and enforcing standards;
providing training, outreach, and education; establishing partnerships; and
encouraging continual improvement in workplace safety and health10.
OSHA was established in 1970 by the
Occupational Safety and Health Act as part of the Department of Labor and is
headed by an Assistant Secretary of Labor. It began operation in 197111. The Act, in addition to establishing OSHA, gave states
authority to establish their own OSHA type enforcement plans in lieu of federal
supervision. There are currently twenty six such approved plans including
California’s CalOSHA. States that do not have approved plans are under the
jurisdiction of FedOSHA.
When the OSH Act was advanced by
Senator Harrison Williams and Congressman William Steiger, occupational
accidents accounted for about 14,000 deaths and nearly 2.5 million disabled
workers each year12. Since then, the work-related
fatality rate has been reduced 62% and the overall illness and injury rate by
42%. OSHA covers private sector employees, but does not cover self-employed
workers, family farms, workers regulated by other federal agencies, and most
public employees at the state and local level. OSHA covers about 111 million
workplaces.
There are eight Directorates in OSHA
including the Directorate of Enforcement Programs, Science and Technology, and
Evaluation and Analysis. Under each Directorate are various Offices having
specific responsibilities. OSHA is divided geographically into ten regions,
each of which is composed of its respective states and territories. OSHA and
its state counterparts field approximately 2100 inspectors.
OSHA Enforcement
OSHA conducts workplace inspections
as authorised by the OSH Act to determine if employers are complying with OSHA
regulations and with the “General Duty Clause”13. The General Duty Clause requires that employees be
furnished with safe and healthy workplaces. The clause is kind of a catch-all
that can be used when specific regulations are inadequate. Inspections are
conducted by OSHA compliance officers trained in industrial safety and hygiene.
Inspections are normally conducted without advance notice.
OSHA has established the following
inspection priority system:
1. Citations
2. Penalties
a.
Other than
serious violations
b.
Serious
violations
c.
Willful
violations
d.
Repeated
violations
e.
Failure
to abate
3. Additional
violations and penalty situations
a.
Falsifying
records
b.
Violating
posting requirements
c.
Assaulting
or otherwise interfering with compliance officers
OSHA activity in fiscal 2003 is
summarized as follows9:
Federal Inspections - Fiscal Year
2003 - 39,798 Inspections
Number Percent
Reason for Inspection
9,025 (22.7%) Complaint/accident related
22,426 (56.3%) High
hazard targeted
8,347 (21%) Referrals, follow-ups, etc.
Number Percent Industry
Sector
22,916 (57.6%) Construction
8,554 (21.5%) Manufacturing
328 (0.8%) Maritime
8,000 (20.1%) Other industries
In the inspections categorized
above, OSHA identified the following violations:
Violations Percent
Type Current Penalties
406 (0.4%) Willful $ 13,251,536
59,899 ( 71.7%) Serious 52,358,997
2,152 ( 2.6%) Repeat 9,557,281
222 (0.3%) Failure to Abate 1,187,349
20,533 (24.6%) Other
2,542,015
350 (0.4%) Unclassified 3,483,185
83,562 TOTAL $82,380,363
State OSHA Inspections - Fiscal Year
2003 - 59,290 Inspections
Number Percent
Reason for Inspection
14,570 ( 24.6%) Complaint/accident-related
36,265 (61.1%) High
hazard targeted
8,455 (14.3%) Referrals, follow-ups, etc.
Number Percent
Industries
27,895 (47%) Construction
11,412 (19.3%) Manufacturing
62 (0.1) Maritime
19,921 (33.6%) Other
industries
In the inspections categorized
above, state job safety and health plans identified the following violations:
Violations Percent
Type Current Penalties
196 (0.1%) Willful $5,060,870
59,693 ( 42.7%) Serious
54,047,799
2,686 ( 1.9%) Repeat 4,860,867
498 (0.4%) Failure to Abate 3,185,193
76,753 (54.9%) Other
5,363,751
2 (0%) Unclassified 5,820
144,075 TOTAL $71,310,017
Note that federal OSHA inspectors
found 83,562 violations for which $82,380,363 in penalties was assessed. In
contrast, state inspections found 144,075 violations and levied $70,310,017 in
penalties. Federal and state OSHA enforcement seems to have been about equal in
activity, not unexpected considering about half of nationwide OSHA activity is
conducted at each level.
Lack of OSHA Enforcement
Administrative agencies tasked with
regulatory responsibilities are praised by some and condemned by others, but
condemnation seems to significantly outweigh praise. The argument rages between
those who think regulation is excessive or unnecessary and those who believe
regulation and enforcement is insufficient. In the minds of some, agencies such
as OSHA defer inappropriately to industry, or illegally ignore legislative
requirements. Others argue that OSHA is overbearing in its encroachments, if
not unconstitutional.
Regulation: Good or Bad
Governments’ authority to regulate
has been established by federal and state constitutions and by judicial notice.
However, the debate rages as to whether regulation helps or hinders, whether
its costs outweigh its benefits, and whether it is unnecessarily broad and
intrusive. It is suggested by some that there are better ways than regulating
to accomplish specific objectives. For example, workplace injuries could be and
are better handled by the tort and contract systems.
This tension between those who favor
regulation and those who do not probably serves to strike a practical balance
between too much and not enough; unless, of course, one falls at the extremes
of the debate. For example, some argue that unannounced OSHA inspections
violate the forth amendment to the Constitution14. Others argue that OSHA is insufficiently enthusiastic as
an enforcer to the point of being criminally negligent.
The debate waxes and wanes with the
political winds. The OSH Act was signed by Richard Nixon, not well-known as a
regulator. OSHA developed and grew during the Carter Administration, a time
when agencies seemed more willing to impose criminal sanctions. During the
Regan and Bush administrations, particularly the Regan administration,
regulation was seen as excessive and cooperation became a more important
regulatory tool. Regan campaigned on a platform that included the elimination
of the Departments of Energy, Education, and Commerce - pervasive regulators
all. During the mid-1990s, due primarily to Congressional pressure, regulation
fell into disfavor, the balance shifting from health based considerations to
cost/benefit considerations. Criminal referrals, with the exception of
financial criminal referrals, are still somewhat constrained.
The costs of regulation are born by
members of the public as employees, employers, taxpayers, and shareholders.
Regulation is not free and comes at monetary costs and infringements on
liberty. Costs of government regulatory actions are born by taxpayers, while
costs of compliance are born by shareholders, customers, and clients of private
enterprise. Whatever one says about the benefits, many of which are illusory,
the costs are real and largely measurable. In an expanding and complex society,
it is unlikely that regulation will fade away. The question is of effectiveness,
cost, and balance.
Agency Capture
It has been said that OSHA was
established primarily to pacify labor and was not a serious commitment to
workplace safety. If this is so, then OSHA is not different from many other
agencies management supported, or at least didn’t oppose, in the Progressive
and New Deal eras. In the case of OSHA, its operational mandate was primarily
the “walk softly” part of “walk softly, but carry a big stick”. OSHA relies
first on cooperation, then sanctions. Many believe cooperation should be
minimized, if not eliminated, in favor of enforcement, because it allows
business to determine OSHA’s direction and enforcement philosophy, effectively
making the agency a captive of business.
Agency capture refers to undue
influence of industry over the workings of a regulatory agency. It can occur
when people move between industry and an agency, either direction, such as to
cause an appearance of conflict of interest. The direction of most concern is
from government to industry such that promises of industry positions are
considered a potential bribe of government officials. It can also be from
industry to government by way of political appointment. This conflict is
particularly suspect when agency oversight of business is lenient, industry
profits are minimally impacted, regulation is minimal, or regulatory law
enforcement is lax. It is often pointed out that this is the typical approach
in Japan, especially in MITI or the Ministry of Finance. In the United States,
a particularly conspicuous example is that of “Beltway Bandits”, high ranking
military officers that go to work for government contractors and consultants
after retirement.
Arguing against the concept of
agency capture is the issue of expertise. Industry has expertise that can be
made available to government and regulators have expertise that can be made
available to industry. In either case, expertise exchange can be effectively
accomplished by exchanging personnel. It is not uncommon for industry to
contract with regulating agencies and for industry to second personnel to
government agencies. Government agencies often contract with industry for
various reasons. Cooperation between industry and regulators is perhaps
required to make the system work.
Another argument countering the
accusation of agency capture is that perhaps Congress expected and, in the case
of OSHA, required cooperation. In some cases, the interests of regulator and
regulated are sufficiently similar so that cooperation is a logical
consequence. That is, regulators and regulated may share a common view of
societal benefit.
Whatever the case may be, the
appearance of agency capture will be obvious to those who view regulators as
being insufficiently active. It is in the eyes of the beholder.
OSHA Sabotage
During the 1980s several
commentators argued that OSHA officials committed criminal acts by willfully
failing to enforce the OSH Act to its maximum extent and by resisting attempts
to force them to do so15. These arguments were not made
during the 1970s to any great extent, diminished during the 1990s, but have
resurfaced in the 2000s16.
The essential argument advanced in
the 1980s was that OSHA officials were guilty of illegal and criminal conduct
when they failed to act as required. That when there is a duty to act, and one
fails that duty, civil and criminal consequences can result. Writers making
such assertions imply that not to act to the full and maximum possible extent
is criminal, making no allowances for discretion specifically allowed by
statute. These writers forcefully assert that when officials’ willful failure
to act results in injury or death, such failure is indisputably criminal.
That OSHA willfully failed to act
during the 1980s is suggested by minimal fines, negotiated settlements, and
reduced penalties when much greater sanctions, including incarceration, were
available. Deliberate harmful acts or egregious failures to act on the part of
employers require nothing less than maximum sanctions. To some, the evidence of
OSHA’s criminality, neglect, complicity, and conspiracy is obvious.
In the early 2000s assertions
similar to those made in the 1980s are being made once again by contemporary
critics. OSHA is called timid, inept, and overmatched. Critics assert OSHA does
not refer cases to the Justice Department for criminal prosecution when such cases
clearly warrant prosecution. A New York Times series of articles in December,
200316, lays out contemporary arguments which are similar to, but
less strident, than the 1980s arguments.
Politics
OSHA is an agency born of politics
and influenced by politics. OSHA is part of the Department of Labor; the heads
of DOL and OSHA are appointed by the President and the agency’s operation is
influenced by Congressional oversight. In the event of perceived inadequacies
or over extensions, Congress can correct the situation by legislation17.
This is a form of political coercion and, with regard to OSHA, elements in
Congress have threatened to restrict its discretion by modifying its enabling
legislation. Other elements of Congress disagree and have blocked such
legislation.
During the 1970s, OSHA was
developing as an agency and used criminal prosecution relatively frequently.
This was an era when liberal democrats controlled the political process: the
executive, legislative, and some argue, the judicial branches of government.
Organized labor was relatively strong during this period as compared to later
periods.
During the 1980s, the Regan
administration actively restricted government regulatory oversight. Candidate
Regan campaigned, in part, on the slogan “government is the problem, not the
solution”. It could be said his election gave him a mandate to curtail what
many believed was excessive intrusion of government into largely private
matters. Regan administration actions in this direction have yet to be fully
reversed.
During the 1990s, a liberal democrat
administration again held office. OSHA enforcement became a bit more active and
criticism of the agency waned to a small extent. However, in the mid-1990s,
conservative philosophy succeeded in partially redirecting the agency from
health based criteria to cost/benefit criteria.
Several significant effects and
reactions to OSHA’s criminal enforcement policies were evident prior to the New
York Times series of articles18. Several states have
filled the perceived void created by OSHA’s lack of criminal enforcement by
increasing their involvement and penalties in workplace safety matters. Not
surprisingly, California, governed until recently by a liberal and pro-labor
administration, was the most active state. In addition, legislation was
introduced in Congress to reclassify some OSHA related misdemeanor offenses to
low level felonies.
The present administration is
conservative, although its practical effect on regulation is unclear. General
criticism of the administration from certain quarters, the loyal opposition, is
not surprising. That OSHA is once again being severely criticized is not
surprising, either.
Conclusion
In the first analysis, it is not
logically possible for the federal government to sabotage OSHA. OSHA is part of
the administrative branch and, as such, implements law according to the
political philosophy of the current administration. The administration can be
changed by voters or OSHA’s apparent enforcement shortfalls can be changed by
legislation or public pressure. In the absence of such remedial actions, any
governmental agency can be expected to enforce its mandate with the discretion
allowed by law and as directed by the political philosophy of the
administration in power.
A second logical imprecision is to
say an agency acts illegally when exercising its lawful discretion. How an
agency exercises such discretion will certainly not please everyone, but to say
such exercise is illegal may be nothing more than sophistry. If courts do not disagree
with an agency’s actions when they are called upon to do so, the actions of the
agency can be considered legal per se, political, journalistic, and academic
arguments not withstanding.
Although aggrieved individuals often
look to government intervention for remedies, in the case of corporate
misdeeds, a better alternative might be wrongful death tort suits. Because
businesses and corporations are economic creatures, they respond to economic
penalties and incentives. It is a powerful economic incentive to modify
behavior if the consequence for not doing so is a large monetary penalty.
It is apparent that criticisms of
government regulation in general and OSHA in particular wax and wane with
political tides. In the case of OSHA, evil is clearly in the eyes of the
beholder. In the Regan and both Bush administrations, government regulation was
in disfavor. Those outside government saw evil in every government corridor and
corner. During the Carter and Clinton administrations, evil was much less
apparent to the critics of the Regan and Bush administrations. This is not to
say improvement is not possible or desirable, but the scope and direction of
improvement depends on prevailing philosophy. Some would argue that eliminating
OSHA is the best policy. Others certainly disagree. However, one aspect of
government is its permanency and tendency to grow19. It is unlikely
that OSHA will be eliminated, but it is possible its activities will be
directed as prevailing philosophy prescribes.
Finally, it can be argued that OSHA
regulation has been effective in reducing workplace deaths, illnesses, and
injuries. OSHA enforcement as indicated by fines and criminal sanctions is not
unsubstantial. It may not be enough for some, but that OSHA is active and
effective is clear.
