Substantial OSHA Penalty Increases Are Coming
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OSHA penalties are going up. EPA’s penalties are going up, too. However, while EPA penalties have been going up modestly every four years to take inflation into account, OSHA penalties have not increased in 25 years. Maximum OSHA penalties may jump as much as about 78 percent next year. For a provision quietly tucked away in budget legislation, this packs quite a punch.
The Legislative Change
On November 2, 2015, President Obama signed into law the Bipartisan Budget Act of 2015. Section 701 of that legislation is the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Adjustment Act). The 2015 Adjustment Act amends the Federal Civil Penalties Inflation Adjustment Act of 1990 to remove the OSHA exemption to the requirement that civil monetary penalties be periodically increased to account for inflation. The amendment also changed the frequency of the inflation increases from “once every 4 years” to “every year.”
In addition, the new law entitles OSHA to a single “catch up” penalty increase to account for the lack of periodic penalty increases, which “shall take effect no later than August 1, 2016.” OSHA is authorized to calculate this initial increase based on the percentage difference between the Consumer Price Index (CPI) in October 2015 and the CPI in October of the calendar year that the civil penalty was last adjusted under any different law. In this instance, because OSHA penalties have not been adjusted since 1990, the catch-up penalty increase will be based on the October 1990 CPI as compared to the October 2015 CPI.
Based on the October 2015 CPI, the percentage difference is expected to be about 78 percent. In the catch-up adjustment, $7,000 OSHA penalties could increase to as much as approximately $12,471, and $70,000 OSHA penalties could increase to as much as approximately $124,710. If OSHA rounds those numbers, the likely maximums would be $120,000 and $12,000.
Past Efforts to Raise Maximum OSHA Penalties
Under section 17 of the Occupational Safety and Health Act of 1970 (OSH Act), OSHA penalties for “willful” or “repeat” violations have a maximum civil penalty of $70,000 but not less than $5,000 for each willful violation. Penalties for “serious” violations have a maximum of $7,000 per violation. Those figures have remained static since 1990 despite repeated efforts to increase them.
For example, in 2009, a Senate bill and a House bill, both entitled the Protecting America’s Workers Act, would have amended section 17 of the OSH Act with one-time maximum civil penalty increases. The $70,000 “willful” violation maximum would have been increased to $120,000 but not less than $8,000 (up from $5,000). The penalties for “serious” violations would have increased from a maximum of $7,000 to a maximum of $12,000, and penalties for “serious” violations that result in employee fatalities would have been increased to a maximum of $50,000 but not less than $20,000 for employers with more than 25 employees. The proposed legislation did not pass either House of Congress. This year, updated versions of the Protecting America’s Workers Act were introduced which would make the same adjustments in penalties.
After more than 25 years and extensive legislative effort, OSHA penalties are poised for a significant initial increase, due to a provision added to an appropriations bill without hearings or debate.
Implications for State OSHAs
About half the states have their own enforcement programs under OSHA-approved state plans, even though they generally enforce OSHA’s standards. Thus, the statutory increase in federal OSHA’s maximum penalties will not directly impact state OSHA programs, whose maximum penalties are set by state law. However, this federal increase is expected to lead to state increases as well. Under section 18 of the OSH Act, state plans must be “at least as effective” as those of federal OSHA. Lower state maximum penalties are not likely to be seen as being “as effective” as federal maximums.
EPA Penalties Are Going Up Too
Under the Federal Civil Penalties Inflation Adjustment Act of 1990, EPA penalties have increased every four years. Between 1996 and 2013, four adjustments of EPA’s statutory civil payment amounts were implemented. Annual inflation adjustments will now be required. In recent years inflation has been low, so the next increase will likely be relatively modest.
Beveridge & Diamond's Occupational Safety and Health Practice provides strategic, business-focused advice to the global chemicals industry. Working alongside our clients’ legal, EHS and technical teams, we help resolve critical enforcement, compliance, and regulatory issues relating to their facilities and operations. For more information on this development or its implications for a specific project, please contact the authors.
 Id at § 701. Prior to the amendment, Section 4(1) read: “by regulation adjust each civil monetary penalty provided by law within the jurisdiction of the Federal agency, except for any penalty (including any addition to tax and additional amount) under the Internal Revenue Code of 1986, the Tariff Act of 1930, the Occupational Safety and Health Act of 1970, or the Social Security Act, by the inflation adjustment described under section 5 of this Act[.]” H.R. 3019, 104th Cong. (1996).
 H.R. 3019, 104th Cong. (1996) (“The head of each agency shall, not later than 180 days after the date of enactment of the Debt Collection Improvement Act of 1996 [Apr. 26, 1996], and at least once every 4 years thereafter[.]”) (emphasis added).
 This initial catch-up adjustment may not exceed 150 percent of the amount of the civil monetary penalties as of the date that the 2015 Adjustment Act was enacted.
 S. 1580, 111th Cong. (2009); H.R. 2067, 111th Cong. (2009). See also Beveridge & Diamond, P.C., Congress Focuses Attention on OSHA Penalties and Enforcement Processes (June 9, 2009).
 In addition, civil penalties for OSHA were subsequently included in proposed mine safety legislation, which was similarly unsuccessful. See H.R. 5663; Beveridge & Diamond, P.C., OSHA Legislation Gets Boost from Mine Safety Bill (Aug. 17, 2010).
 As described in the most recent (2013) EPA notice raising maximum penalties, “EPA’s initial adjustment to each statutory civil penalty amount was published in the Federal Register on December 31, 1996 (61 FR 69360), and became effective on January 30, 1997 (‘the 1996 Rule’). EPA’s second adjustment to civil penalty amounts was published in the Federal Register on February 13, 2004 (69 FR 7121), and became effective on March 15, 2004 (‘the 2004 Rule’). EPA’s third adjustment to civil penalty amounts was published in the Federal Register on December 11, 2008 (73 FR 75340), as corrected in the Federal Register on January 7, 2009 (74 FR 626), and became effective on January 12, 2009 (‘the 2008 Rule’)”; and the fourth adjustment was published in the Federal Register on November 6, 2013. 78 Fed. Reg. 66643 (Nov. 6, 2013).