24 ELR 10588 -- Reinventing Government Inspections: Proposed Reform of the Occupational Safety and Health Act

Reinventing Government Inspections: Proposed Reform of the Occupational Safety and Health Act

Douglas L. Tookey

Douglas L. Tookey is currently a Fulbright Scholar studying environmental law in Singapore. He received his J.D. from Cornell Law School, and clerked for U.S. District Judge Edward W. Nottingham, District of Colorado, and Judge Emilio M. Garza, U.S. Court of Appeals for the Fifth Circuit.

[24 ELR 10588]

In September 1991, 25 people died at the Imperial Food Products plant in Hamlet, North Carolina, when they were trapped in a factory fire.¹ Witnesses to the fire said the employees could not escape because the building doors were locked, apparently to prevent pilferage.² The North Carolina assistant labor commissioner subsequently stated³ that the locked doors constituted "serious violations" of the Occupational Safety and Health Act (OSH Act).⁴ The plant, however, had never been inspected for health or safety violations in its 11 years of operation.⁵ In fact, with the number of inspectors in North Carolina at that time, it would have taken 65 years to visit every workplace in the state.⁶ OSH Act reform advocates cite the Imperial Food Plant fire to argue that worker protection laws must be strengthened.

Vice President Al Gore has suggested that the OSH Act might be a good place to start "reinventing government," and has proposed reforms intended to increase the frequency of inspections without hiring hundreds of new federal inspectors. Gore's report, Creating a Government That Works Better and Costs Less (the National Performance Review Report),⁷ champions privatizing the occupational safety and health inspection process to reduce government costs and encourage voluntary compliance with regulations. This Dialogue explores some of the advantages and disadvantages of Gore's proposed reforms, discusses the differences between Gore's proposal and reform bills currently pending before Congress, and addresses the U.S. Department of Labor's (DOL's) views on OSH Act reform.

The Occupational Safety and Health Act

Congress enacted the OSH Act in 1970, "to assure as far as possible every working man and woman in the Nation safe and healthful working conditions."⁸ The OSH Act applies to a broad range of private-sector employers, who must observe occupational safety and health standards, maintain accurate records on work-related accidents, inform employees of their benefits and burdens under the OSH Act, and allow inspections of business premises.⁹

The OSH Act does not include specific safety or health standards. Rather, Congress gave the Secretary of Labor broad authority under OSH Act § 6¹⁰ to promulgate regulations to protect workers exposed to safety and health hazards in their employment, including environmental hazards. Section 6(b)(5) authorizes the Occupational Safety and Health Administration (OSHA) to promulgate workplace exposure standards for toxic materials or harmful physical agents. When promulgating such standards, OSHA evaluates whether the proposed standard is based on the best available and the latest scientific data. Under § 6, OSHA has promulgated standards dealing with air contaminants,¹¹ hazard communication,¹² bloodborne pathogens,¹³ lead exposure,¹⁴ hazardous waste operations and emergency response,¹⁵ and hazardous energy sources.¹⁶

Section 5(a)(1) of the OSH Act, the general duty clause, provides that each employer shall provide a workplace that is free of recognized hazards that cause or are likely to cause death or serious physical harm.¹⁷ It is usually considered [24 ELR 10589] a "safety net" to cover employers or operations that are not governed by specific standards. In determining whether an employer has violated the general duty clause, OSHA considers whether the employer failed to keep the workplace free of a hazard to which its employees were exposed, whether the hazard was recognized, whether the hazard caused or was likely to cause death or serious physical harm, and whether there was a feasible and useful method to correct the hazard.

OSHA polices compliance with the OSH Act primarily through surprise inspections. Because of the limited number of inspectors, only 1 to 2 percent of all workplaces are inspected each year.¹⁸ Inspections are targeted toward high-hazard industries and employers and those about which OSHA has received complaints, and repeat or egregious noncompliance draws higher and more frequent fines.¹⁹

Vice President Gore's Proposal for OSH Act Reform

In the well-received National Performance Review Report,²⁰ presented to President Clinton on September 7, 1993, Vice President Gore recommended that the Secretary of Labor issue new worksite health and safety regulations relying on employers, rather than the federal government, to conduct inspections.²¹ The National Performance Review Report recognizes that hundreds or even thousands of new inspectors could not inspect all the workplaces that need to be inspected if the OSH Act is to be enforced adequately. This proposal, based on certified self-inspections, seeks a simple solution to the problem -- using the private sector to enforce the OSH Act. OSHA's duties under the proposal, as elaborated in a DOL Draft Report supplementing the National Performance Review's OSH Act recommendation, would consist of setting inspection and reporting standards and conducting random reviews, audits, and inspections to ensure the quality of the employer-conducted inspections.²² It is unclear whether the proposal envisions OSHA adding more federal inspectors to its workforce.

The effect of the recommendation is far-reaching, as it would shift much of the responsibility for -- and therefore the cost and burden of -- inspections from OSHA to employers. The National Performance Review Report claims that as a result, the government would save money and streamline government processes. The Report sets forth two options to meet this goal: The first involving private inspection companies and the second involving employee inspectors.

Private Inspection Companies

Under the first option, employers wouldhire third parties, probably private inspection companies, to conduct the inspections. The inspection companies would inspect the worksites and provide employers with safety and health reports, including recommended corrective action plans. The employers would arrange and pay for the inspections and develop and implement the corrective action plans.²³

This option has some clear benefits. By increasing the number of inspections, this option would likely increase current safety and health prevention efforts and thus reduce injuries, illness, and time lost on the job. Fewer government resources would be required per inspection because private industry would carry the inspections out. Having private parties conduct the inspections would also create jobs in private industry.

This option does, however, also have some disadvantages. The DOL Draft Report indicates that the new market created for inspection services would likely become competitive, and that the market would respond to competition by becoming efficient. The implication is that competition would lead to quality inspections. But competition in the inspection market could easily focus on lower prices rather than higher quality. Critics would argue that such a program lacks incentives for employers to hire thorough inspectors, because they are more likely to identify violations that may be costly to correct. Some employers might be content with a more cursory inspection at the lowest price.

Also, some employers may oppose this option because they would be required to pay the additional costs of outside inspections. Inspections can be expensive and time-consuming, and may involve a significant loss of productivity during the inspection. The DOL Draft Report²⁴ supplementing the National Performance Review Report notes, however, that considering the traditional tension between OSHA and private industry, many employers may prefer paying for private inspectors to the perceived government intrusion occasioned by the presence of OSHA inspectors.

Employee Inspections

Under the second option, the DOL would authorize non-management employees who are experts in certain fields to conduct inspections of the workplace. The employer would then take action to remedy any problems. Employees who take part in an inspection would be trained and certified by an OSHA-approved organization, and the results of the inspection would have to be certified. Employees would also serve as safety and health representatives on "quality teams" under this option. The employee teams, with OSHA's technical assistance, would be responsible for reviewing existing safety and health programs, reports on incidents that resulted in work-related deaths and injuries, and work injury and illness records.²⁵

[24 ELR 10590]

With employee inspectors at the company on a daily basis, it seems inevitable that the company's safety would be maintained at a higher level. Because employees work at the company everyday, they may have unique insights into how to best achieve worker safety at a particular facility. In addition, "the strong involvement of both labor and management may help them feel ownership of the problem and have safety and health concerns become a true part of day-to-day operations."²⁶ Moreover, involving employees in evaluating the safety of the workplace may increase productivity by improving employee morale.

On the other hand, thorough and effective inspections require knowledgeable and well-trained inspectors. In some situations, the cost of training employees for these duties could be prohibitive. Such employee participation could also lead to worker-management conflict. Disputes about an employer's compliance with the OSH Act and any resulting conflict between workers and management could lead to problems with the facility's operation and might actually make this inspection option slow and unworkable. Further, employee-conducted inspections may be less reliable than government inspections, since some employees may hesitate to report hazards or violations out of fear of employer reprisal or in an attempt to gain favor with management.

Since both options create the potential for circumvention of the OSH Act's requirements, OSHA would need to provide oversight of inspections under either option. OSHA would be put in the position of policing not only the employers, but also the nongovernment inspectors. The DOL Draft Report notes that changes in spending based on this recommendation "cannot be determined."²⁷

The AFL-CIO issued a statement opposing all proposals, including Gore's, for voluntary compliance or self-enforcement by employers.²⁸ The AFL-CIO advocates aggressive enforcement, but feels that the government should enforce the law.²⁹ Another criticism of Gore's proposal is that it illustrates the Clinton Administration's regulatory philosophy, which allegedly involves creating "a new federal mandate requiring private businesses to bear the cost of governmental activities."³⁰

Compliance Incentive Programs

The National Performance Review Report proposes establishing a "sliding scale of incentives" for employers to encourage compliance with the rules.³¹ In many environmental areas, including occupational safety and health, members of the regulated community frequently complain that the regulating agencies do not discriminate in their enforcement practices between companies that try in good faith to comply with regulations, but nonetheless have an occasional violation, and companies that do not make as much effort.³² The proposed incentive program is an attempt to address this concern. The incentives scale would go into effect one or two years after the DOL promulgates the self-inspection regulations. Direct economic incentives under the program could include contracting preferences for employers with good records, reduced paperwork burdens, and fewer required inspections. Indirect economic benefits might include community good will derived from reports about the employer's performance and increased productivity as a result of employee satisfaction. The DOL Draft Report notes that the scale could also include reduced audit frequency as well as lower penalties for employers who make a good-faith effort to comply with workplace safety and health requirements.³³ Sanctions for continued noncompliance could include higher and more frequent fines and barring the employer from receiving federal contracts.

Using the Market to Achieve Government Objectives

Vice President Gore's OSHA proposal originated from ideas proposed in the best-selling book, Reinventing Government, which advocates achieving governmental objectives through a "market-oriented government."³⁴ The crux of the incentives plan for the OSH Act inspection proposals is that it allows the government to effectuate change through the market. Although the safety regulations themselves would still take the command-and-control approach, employers that maintained good compliance records would eventually begin to reap direct and indirect economic benefits in addition to avoiding heavy fines. Participation in the safety market through the inspection program would not be optional, but the program would provide market incentives for employers to purchase a lot of safety.

This idea has been successful in several private sector areas. For example, as the National Performance Review Report notes, the government achieves compliance with securities laws by using a similar system. The government sets standards and requires periodic certification of a company's books by financial auditors.³⁵ The federal government does not hire its own inspectors to audit the company's books to ensure compliance with securities law, rather, it relies on the private sector to achieve its goals. Another example is the reliance by some states on private inspectors rather than state inspectors to ensure that buildings are free of radon gas. The state simply publishes a list of companies that perform radon mitigation or diagnosis.³⁶ Individuals then choose one of these companies to conduct an inspection.

[24 ELR 10591]

OSH Act Reform Bills Currently Before Congress

Some type of OSH Act reform in the near future seems likely, given the high costs of workplace accidents³⁷ and the DOL's "[push] to strengthen worker protection."³⁸ Indeed, OSH Act reform legislation is currently pending before Congress. A Senate bill, S. 575,³⁹ sponsored by Sen. Edward M. Kennedy (D-Mass.) -- and its companion House version, H.R. 1280,⁴⁰ sponsored by Rep. William D. Ford (D-Mich.) -- would, if enacted, comprehensively overhaul the OSH Act, extend coverage to public employees, and extend employer duties to all employees working at a place of employment.

The legislation does not propose that companies police their own safety, as does the National Performance Review Report.⁴¹ Senator Kennedy's office was reportedly "stunned" to discover the Report's emphasis on certified self-inspections.⁴² Kennedy's bill would, however, require employers to establish procedures for identifying, documenting, and correcting safety and health violations.⁴³ Section 201 of the bill proposes "Safety and Health Committees," composed of employees and employers, intended to "assist the employer and make recommendations regarding methods of addressing safety and health hazards."⁴⁴ Section 1206 of the proposed legislation proposes an "Advisory Committee on Construction Safety and Health," which would include members who would present the viewpoints of both the employers and the employees involved.⁴⁵ These committees would provide a forum where workers and managers could discuss the best ways to improve workplace safety in a cooperative atmosphere.⁴⁶

The DOL's Reform Efforts

Rep. Harris W. Fawell (R-Ill.) recently wrote to Secretary of Labor Robert B. Reich and complained that "there seems to be very little follow-through by the Administration" on the self-inspection proposal, and that the DOL seemed to be running from the National Performance Review recommendation.⁴⁷ In response, Secretary Reich stated that the National Performance Review did not intend that OSHA "reduce its enforcement resources or its inspection effort" and that the self-inspection proposal set forth in the National Performance Review Report is an "option" by which "the private sector … [can] strengthen OSHA's capability to combat workplace hazards."⁴⁸

In the spring of 1993, Secretary Reich established a Task Force to review the OSH Act and to make recommendations for its improvement. The Task Force views the pending OSH Act reform legislation as consistent with Gore's proposal.⁴⁹ On February 9, 1994, Secretary Reich testified before the Senate Committee on Labor and Human Resources that the Clinton Administration supports rapid OSH Act reform.⁵⁰ Reich did not specifically address the National Performance Review Report's OSH Act proposal but stated that the "Department supports the requirement that employers have a written safety and health program [because] everyone agrees that employers and employees must have greater involvement in identifying and abating safety and health hazards."⁵¹

The DOL does not envision certified self-inspection as a replacement for OSHA inspection. The head of OSHA was recently quoted as saying that he hopes companies will increase self-inspection "as a supplement to what is already [24 ELR 10592] being done."⁵² Because the DOL recognizes that OSHA has limited inspection resources, it has looked at worksite solutions.⁵³ OSHA has begun work on a rule requiring employers to develop on-site safety and health programs, and expects to issue a proposal in fiscal year 1995.⁵⁴

Conclusion

While Vice President Gore's recommendation would require change on the part of business and OSHA, it could be a cost-effective way to improve the health and safety of workers in America. The recommendation takes a pragmatic approach to worker safety, and stresses that for the government to achieve its goal of worker safety, employers and employees must work together to remove hazards from the workplace. Although the proposal presents some problems, it has merit and should be given a chance. The bottom line is that unless OSHA hires hundreds or thousands of new inspectors -- an unlikely scenario given today's tight budgetary constraints -- OSHA can never adequately inspect all the workplaces that need inspection. Vice President Gore's proposal could be a first step toward ensuring that workplaces in the United States are inspected for worker safety. It should be tested to see whether a market-based inspection strategy can succeed where traditional governmental mechanisms have failed.

1. Michael Hobbs, N.C. Ranked Last in Number of Safety Inspectors, Associated Press, Sept. 5, 1991, available in LEXIS, Nexis Library, Associated Press File.

2. Id.

3. James C. Benton, Plant Where 25 Died Never Inspected for Safety, Associated Press, Sept. 3, 1991, available in LEXIS, Nexis Library, Associated Press File.

4. Pub. L. No. 91-596, 84 Stat. 1590 (1970), 29 U.S.C.A. §§ 651-678 (West 1985 & Supp. 1994).

5. Benton, supra note 3.

6. Hobbs, supra note 1.

7. VICE PRESIDENT AL GORE, CREATING A GOVERNMENT THAT WORKS BETTER AND COSTS LESS -- REPORT OF THE NATIONAL PERFORMANCE REVIEW 62-63 (Sept. 7, 1993) [hereinafter NATIONAL PERFORMANCE REVIEW REPORT].

8. OSH Act § 2(b), 29 U.S.C.A. § 651(b) (West 1985).

9. OSH Act § 5, 29 U.S.C.A. § 654(a) (West 1985).

10. 29 U.S.C.A. § 655 (West 1985).

11. 29 C.F.R. § 1910.1000 (1993).

12. Id. § 1910.1200.

13. Id. § 1910.1030.

14. Id. § 1910.62.

15. Id. § 1910.120.

16. Id. § 1910.147.

17. 29 U.S.C.A. § 654 (West 1985).

18. OSHA Safety Inspectors Will Target Most Dangerous Places to Work, OCCUPATIONAL HEALTH & SAFETY LETTER (BPI, Silver Spring, MD), May 4, 1994, at 68.

19. Id.

20. NATIONAL PERFORMANCE REVIEW REPORT, supra note 7.

21. Under OSH Act § 8(c), the Secretary may issue regulations requiring employers to conduct periodic inspections. 29 U.S.C.A. § 657(c) (West 1985) ("In order to carry out the provisions of this paragraph such regulations may include provisions requiring employers to conduct periodic inspections.").

22. DOL TEAM DRAFT REPORT: REFOCUS THE RESPONSIBILITY FOR ENSURING WORKPLACE SAFETY AND HEALTH (Sept. 9, 1993) [hereinafter DOL DRAFT REPORT]; see also NATIONAL PERFORMANCE REVIEW REPORT, supra note 7, at 63. The Vice President's office promised to release accompanying reports for the National Performance Review's recommendations for each agency on October 5, 1993. The accompanying reports, however, had not been released at presstime. This Dialogue is based on a copy of the DOL Draft Report for the recommendation discussing employer self-inspection. According to the Vice President's office, the final accompanying report dealing with this recommendation and other DOL recommendations should be issued "soon."

23. DOL DRAFT REPORT, supra note 22, at 49.

24. Id., supra note 22, at 50.

25. Id., supra note 22, at 49.

26. Id., supra note 22, at 50.

27. See id., supra note 22, at 50.

28. Employers Would Do Job Safety Inspection Under Gore's Plan for Reinventing Government, Daily Labor Rep. (BNA), Sept. 8, 1993 (citing Sept. 7, 1993, statement of Lane Kirkland, AFL-CIO President ("we will continue to oppose proposals for 'voluntary compliance' or self-enforcement by employers")) (on file with ELR -- The Environmental Law Reporter).

29. Id.

30. Ken Rankin, VEEP Eyes OSHA Self-Compliance Plan, DISCOUNT STORE NEWS, Oct. 4, 1993, at 12.

31. See NATIONAL PERFORMANCE REVIEW REPORT, supra note 7, at 63.

32. See FRANK FRIEDMAN, PRACTICAL GUIDE TO ENVIRONMENTAL MANAGEMENT 29, 218-19 (5th ed. 1993).

33. See DOL DRAFT REPORT, supra note 22, at 49.

34. DAVID OSBORNE & TED GAEBLER, REINVENTING GOVERNMENT -- HOW THE ENTREPRENEURIAL SPIRIT IS TRANSFORMING THE PUBLIC SECTOR (1992).

35. See NATIONAL PERFORMANCE REVIEW REPORT, supra note 7, at 62; see also 15 U.S.C.A. § 78m (West 1981 & Supp. 1994) (discussing annual reports); 17 C.F.R. § 240.15d-1 (1993) (requirement of annual reports).

36. One such state is Connecticut. See CONN. GEN. STAT. §§ 19a-14b (1992) (radon mitigators, diagnosticians, and testing companies).

37. Secretary Reich wrote to Sen. Edward M. Kennedy and Rep. William D. Ford and stated that OSH Act reform is needed because of the high cost of workplace fatalities and injuries. Reich Pledges DOL Support for Legislative Reform of OSHA, EMPLOYMENT SAFETY & HEALTH GUIDE (CCH) No. 1190 (Jan. 17, 1994) (citing letter from Robert B. Reich, Secretary of Labor, to Sen. Edward M. Kennedy (Dec. 22, 1993) ("we intend to move ahead promptly with a regulatory effort to require employers to establish comprehensive occupational safety and health programs, and explore ways to have those programs and their implementation regularly certified by either private-sector experts or suitable employee representatives.")) (on file with ELR -- The Environmental Law Reporter).

38. Frank Swoboda, Reich Vows Before AFL-CIO to Enforce Workplace Laws, WASH. POST, Oct. 6, 1993, at F10. In fact, the DOL recently "proposed a $ 1.3 million fine against a Pennsylvania painting contractor for failing to provide minimal protection for its workers" against lead exposure, and the "action could test the Clinton administration's promise to crack down on employers who violate federal health and safety standards." Frank Swoboda, OSHA Seeks to Fine Firm $ 1.3 Million, WASH. POST, Feb. 2, 1994, at F3.

39. S. 575, 103d Cong., 1st Sess. (1993). See also The Occupational Safety and Health Act -- Making the Case for Reform: Hearings Before the Senate Comm. on Labor and Human Resources, 103d Cong., 1st Sess. (1993) (various statements regarding OSH Act reform).

40. H.R. 1280, 103d Cong., 1st Sess. (1993).

41. Another House version, H.R. 2937, was introduced by Rep. Harris W. Fawell (R-Ill.). H.R. 2937, 103d Cong., 1st Sess. (1993). This version includes a similar certification option for employers. Id. § 7 (voluntary compliance). In a letter to Vice President Gore, Republican members of the House Committee on Education and Labor stated that they "strongly support the [National Performance Review's] recommendation to allow employers the option of using third parties or 'in-house' programs to certify the safety of the workplace, and to create incentives in the OSHA program to encourage employers to have good safety records." Letter from Republican Members of House Committee on Education and Labor to Al Gore, Vice President of the United States (Oct. 18, 1993) (on file with ELR -- The Environmental Law Reporter).

42. Meg Vaillancourt, OSHA Reform Plan Draws Fire, BOSTON GLOBE, Sept. 9, 1993, at 43.

43. S. 575, 103d Cong., 1st Sess. § 101 (1993).

44. Id. § 201.

45. Id. § 1206.

46. William A. Rodger, Opponents Views Differ Widely Over New OSHA Reform Law, WASH. BUS. J., Week of Nov. 12-18, 1993, at 38, 46 (discussing similar provision in H.R. 1280).

47. Letter from Rep. Harris W. Fawell to Al Gore, Vice President of the United States, and Robert B. Reich, Secretary of Labor (Nov. 22, 1993) (on file with ELR -- The Environmental Law Reporter). Representative Fawell notes that the Clinton Administration's National Performance Review implementation bill, H.R. 3400, 103d Cong., 1st Sess. (1993), does not include the OSH Act self-inspection recommendation.

48. Letter from Robert B. Reich, Secretary of Labor, to Rep. Harris W. Fawell (Feb. 9, 1994) (on file with ELR -- The Environmental Law Reporter).

49. Telephone Interview with Peter Galvin, Legislative Officer, Office of Congressional and Intergovernmental Affairs, Department of Labor (Feb. 23, 1994).

50. The Comprehensive Occupational Safety and Health Reform Act: Hearings on S. 575 Before the Senate Comm. on Labor and Human Resources, 103d Cong., 2d Sess. (Feb. 9, 1994) (statement of Robert B. Reich, Secretary of Labor). The head of OSHA gave similar testimony before the House Education and Labor Committee's Subcommittee on Labor Standards, Occupational Health, and Safety. See The Comprehensive Occupational Safety and Health Reform Act: Hearings on H.R. 1280 Before the Subcomm. on Labor Standards, Occupational Health, and Safety of the House Comm. on Education and Labor, 103d Cong., 2d Sess. (1994) (statement of Joseph A. Dear, Assistant Secretary of Labor).

51. Statement of Robert B. Reich, Secretary of Labor, supra note 50.

52. Kevin G. Salwen, White House to Proffer Ergonomic Rule for Workplaces, Employers' Liabilities, WALL ST. J., Nov. 22, 1993, at B5.

53. Telephone Interview with Peter Galvin, supra note 49.

54. See Statement of Robert B. Reich, supra note 50.