U.S. OSHA recently released its new Field Operations Manual (“Manual”), with several changes of particular importance to oil and gas operations. The Manual is the field guidance that directs the work of OSHA’s Compliance, Safety & Health Officers (“CSHOs”) commonly referred to as “OSHA inspectors.” OSHA makes the Manual publicly available so that regulated industries can understand the guidelines governing inspectors’ actions at their worksites. The energy industry, particularly the oil and gas sector, should take especial heed of the new Manual.
The revisions and additions to the new Manual reflect increasing regulatory focus on enforcing workplace health and safety standards. The oil and gas industry can expect heightened scrutiny. In recent years, oil and gas operations, particularly exploration and production, have experienced a rise in workplace fatalities. This negative trend in fatal incidents has been highlighted both in industry and mainstream media sources. U.S. OSHA has issued special guidance directly addressing the most common causes of fatalities and serious injuries in the oil and gas sector. Accordingly, oil and gas operators should anticipate increased OSHA oversight and intervention, reinforcing the importance of becoming familiar with the new Manual and its recommendations.
Generally, the new Manual, like its 2011 predecessor, provides enforcement policies and procedures and ensures that federal inspectors uniformly enforce occupational safety and health standards. The new Manual enlarges OSHA’s penalty authority, grants inspectors greater discretion, and includes additional revisions that will further impact the energy industry.
The following summarizes some of the more significant changes to the Manual.
Increased Inspections at Multi-Employer Jobsites
The revised Manual increases the likelihood of one or more unprogrammed inspections when a fatality or catastrophic event occurs at a multi-employer worksite. This is of particular importance as energy-industry projects often involve multiple employers, and in recent years fatality rates have increased in upstream operations. Regular OSHA practice is to perform an unprogrammed ‘wall-to-wall’ inspection following a workplace fatality or catastrophic event occurring at a single-employer worksite. This change means that at a multi-employer worksite an employer not involved in a fatality or catastrophic event is nevertheless open to an unprogrammed inspection. For example, Companies A, B, and C are involved in the construction of a well site. A fatality occurs at the jobsite of Company A. Although Companies B and C had no involvement in the incident, their jobsites, as part of the overall well construction worksite, could nonetheless be subjected to an unprogrammed inspection.
Because of this change, it is even more important for companies to prepare for OSHA inspections, and to collaborate with other employers involved in multi-employer projects.
Specific Scrutiny of Upstream Oil & Gas Operations
The new Manual highlights OSHA’s February 11, 2015 policy memorandum concerning the addition of upstream oil and gas hazards to the list of High-Emphasis Hazards in the Severe Violator Enforcement Program. Again, this is a reflection of increased concern with workplace fatalities in upstream operations, and portends greater scrutiny of the industry.
Increased Penalty Authority
The new Manual increases maximum civil penalty amounts and makes substantial changes to penalty adjustments that both increase the potential dollar amount of penalties and restrict available reductions.
These changes include:
- Increasing the maximum penalty amounts for high, moderate & low gravity violations based onprevious statutory authorization. (Note that a recently passed Congressional budget amendment authorizes the first substantial additional increases to OSHA’s penalty authority since 1990. These penalty increases are authorized for August 2016 and beyond and will likely require rulemaking to be made effective.)
- Mandating a penalty increase of 10% for citations that have become a final order.
- Increasing the length of time from three to five years that prior citations remain “on the books” for use in determining repeat violations.
- Reducing employer good faith penalty discounts from 35% to 25%. Additionally, no increase or reduction is allowed for employers that have not been inspected within the last 5 years.
- Reducing penalty discounts for smaller employers. In the case of businesses with 26-100 employees, the maximum reduction is now 30% (down from 40%). Businesses with 101-250 employees may now only obtain a 10% reduction (down from 20%).
- Penalty adjustments will now be calculated using an algorithm that can result in smaller reductions than would have been the case under the previous procedure.
Inspectors Get Greater Discretion
Two other revisions provide inspectors greater discretion. First, the Manual now refers specifically to inspectors’ ability to deny an employer or employee representative the right to participate in an inspection if the inspector believes that the representative’s “conduct interferes with a fair and orderly inspection.” While this power has always existed under the OSH Act, its reference in the Manual increases the potential for inspectors to use this power. Further, while we have previously noted the importance of accompanying an officer during an inspection, an employer representative must be increasingly careful that his or her conduct in no way interferes with the inspection.
Second, trade secret protections for documents, including photographs, videotapes, environmental samples and OSHA documentation forms, now attach only if the inspector “has no clear reason to question such identification.” This level of discretion can lead to confusion and increase the probability of conflict between the inspector and the employer, especially in the energy industry, when trade secret protection is often warranted. This can also necessitate seeking advice from legal counsel at a very early stage in the inspection.
New Recordkeeping and Reporting Requirements
The Manual incorporates the recent revisions to OSHA’s Injury and Illness Recording and Reporting regulation that became effective on January 1, 2015. Recordkeeping and reporting violations have been a frequent trigger for employee complaints and for OSHA citations and penalties. The revision to the regulation and emphasis in the Manual will likely continue or even magnify the frequency and number of citations. These revisions also expand the number of industries required to keep records of work-related injuries and illnesses.
Other Significant Changes
Other significant changes to the Manual include:
- Allowing workers without a certified or recognized bargaining agent to authorize third-party organizations or individuals to act as their representative during an inspection.
- The availability of digital signatures to employees who lodge a complaint through the OSHA website, thereby speeding up the process by which OSHA initiates an investigation. Previously, employee complaints required a process including faxing and mail which presented multiple opportunities for the employee to lose interest in pursuing the complaint.