Workplace Safety and Health: OSHA's Oversight of Its Civil
Penalty Determination and Violation Abatement Processes Has
Limitations (13-AUG-04, GAO-04-920).
This report presents the findings of our study of the Department
of Labor's Occupational Safety and Health Administration's (OSHA)
determination of civil penalties and abatement of violations. The
objective of the study was to assess the extent of OSHA's
oversight of the civil penalty determination and the violation
abatement processes. In addition, we developed a statistical
model, known as a multivariate analysis, to better understand
factors that influenced variation in penalty amounts. On July 7,
2004, we briefed Labor officials on the results of our study.
This letter report formally conveys the information we presented
at that briefing. To assess the extent of OSHA's oversight of the
civil penalty determination and violation abatement processes, we
(1) reviewed 2002 and 2003 regional audits from the five regions
with the most inspections, (2) visited one of these regional
offices and one area office within this region to interview
officials and review documents and procedures, (3) conducted
telephone interviews with the four remaining regional offices and
one area office within each of those regions, (4) interviewed
OSHA officials to identify relevant policies and procedures, and
(5) reviewed relevant policies and procedures. In addition, we
explored another possible oversight technique--a quantitative
multivariate analysis to better understand factors that influence
variation in penalty amounts.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-04-920
ACCNO: A11569
TITLE: Workplace Safety and Health: OSHA's Oversight of Its
Civil Penalty Determination and Violation Abatement Processes Has
Limitations
DATE: 08/13/2004
SUBJECT: Fines (penalties)
Inspection
Internal audits
Internal controls
Occupational health standards
Occupational safety
Policy evaluation
Safety regulation
Safety standards
Working conditions
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GAO-04-920
United States Government Accountability Office
GAO Report to the Secretary of Labor
August 2004
WORKPLACE SAFETY AND HEALTH
OSHA's Oversight of Its Civil Penalty Determination and Violation Abatement
Processes Has Limitations
GAO-04-920
Contents
Letter 1
Appendix I Briefing Presented on July 7, 2004
Appendix II Comments from the Department of Labor
Abbreviations
FIRM Field Inspection Reference Manual
IMIS Integrated Management Information Systems
OEA Office of Evaluations and Audit Analysis
OSHA Occupational Safety and Health Administration
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separately.
United States Government Accountability Office Washington, DC 20548
August 13, 2004
The Honorable Elaine L. Chao Secretary of Labor
Dear Madame Secretary:
This report presents the findings of our study of the Department of
Labor's Occupational Safety and Health Administration's (OSHA)
determination of civil penalties and abatement of violations. The
objective of the study was to assess the extent of OSHA's oversight of the
civil penalty determination and the violation abatement processes. In
addition, we developed a statistical model, known as a multivariate
analysis, to better understand factors that influenced variation in
penalty amounts. On July 7, 2004, we briefed Labor officials on the
results of our study. This letter report formally conveys the information
we presented at that briefing (see app. I).
OSHA penalties are a critical enforcement strategy meant to deter
employers from violating safety and health standards. In fiscal year 2003,
OSHA proposed civil penalties that totaled over $114 million and conducted
inspections across approximately 40,000 employers. In determining the
penalty amount, OSHA inspectors must apply four factors identified in the
Occupation Safety and Health Act of 1970:1 (l) the gravity of the
violation, (2) the size of the business, (3) the employer's history of
previous violations, and (4) the good faith of the employer.2 OSHA's Field
Inspection Reference Manual (FIRM) contains the criteria inspectors should
use in applying each of these four factors. For example, in assessing
gravity, the manual instructs that the inspector consider two elements,
severity and probability, which are then to be analyzed on a
1Under the Occupational Safety and Health Act, OSHA is authorized to issue
citations for violations of the act and propose penalties. Appeals are
heard by the Occupational Safety and Health Review Commission, an
independent federal agency, which has the authority to assess penalties.
If a penalty is deemed proper, the commission considers a number of
factors to determine the amount of the assessment. Citations and proposals
that are not appealed become final decisions of the commission. 29
U.S.C.S:S: 658, 659 (2000). Because most citations and proposed penalties
are not appealed to the Commission, we refer only to OSHA's enforcement
activities in this report.
229 U.S.C. S: 666(j).
scale of high to low. Application of the gravity criteria results in an
initial base penalty amount. The other factors, as described in the
manual, may then be used to reduce the amount if applicable and can result
in up to a 95 percent reduction in the base penalty amount.3 Given this
approach for establishing penalty amounts, it is essential that inspectors
apply the criteria for the four factors accurately and consistently.
OSHA has delegated authority for overseeing its enforcement and program
activities to the 10 regional offices. The regional offices oversee
operations of 80 area offices. OSHA requires that regional offices conduct
annual audits of area offices' adherence to proper procedures for penalty
calculation, penalty collection, and abatement of safety and health
hazards found at work sites. OSHA allows regional offices to conduct these
audits in several ways, including reviewing area offices' statistical
reports or inspection case files and by administering questionnaires to
the area offices. In addition, every 2 years regional offices are required
to conduct on-site audits at all area offices. Each area office is
responsible for responding to recommendations for improvements that arise
from these regional audits. Moreover, regional offices are responsible for
sharing the results of their audits with OSHA's national office.
To assess the extent of OSHA's oversight of the civil penalty
determination and violation abatement processes, we (1) reviewed 2002 and
2003 regional audits from the five regions with the most inspections, (2)
visited one of these regional offices and one area office within this
region to interview officials and review documents and procedures, (3)
conducted telephone interviews with the four remaining regional offices
and one area office within each of those regions, (4) interviewed OSHA
officials to identify relevant policies and procedures, and (5) reviewed
relevant policies and procedures. In addition, we explored another
possible oversight technique-a quantitative multivariate analysis to
better understand factors that influence variation in penalty amounts. We
calculated differences in final penalty amounts for serious violations and
analyzed what might account for those differences. Using our statistical
model, we first estimated how the gravity of the violation and size of the
employer, two of the variables used to calculate penalties, affected
penalties. We then added other variables to the model, such as industry
type and region, to assess if and how other variables not formally used in
3For example, according to the FIRM, good faith of an employer refers,
among other things, to the extent to which an employer has implemented a
safety and health program.
calculating penalties affected penalty amounts. We based our multivariate
analysis on inspection and violation data (fiscal years 1999 to 2002) from
OSHA's Integrated Management Information System (IMIS). We assessed the
completeness of these data by reviewing OSHA's documentation on how the
data were collected and performed electronic tests to look for outliers,
missing values, or duplicate records. On the basis of these reviews and
tests, we found the data sufficiently reliable for our purposes. We
conducted our work between October 2003 and May 2004 in accordance with
generally accepted government auditing standards.
In summary, we found that OSHA's oversight for ensuring that penalties are
correctly determined and violations are properly abated has limitations.
While the national office receives copies of the regions' annual audits,
it does not review them or use them to monitor the extent to which
penalties are calculated correctly and violations are properly abated. The
national office's underutilization of audit results may be problematic
because audit results identified significant problems. For example, audits
found that some area offices miscalculated penalties and failed to conduct
required follow-up inspections to ensure the proper abatement of
violations. Even if OSHA were to use the results of annual audits for
oversight purposes, the information these audits provide may not always be
complete. In fact, four of the five regional offices we reviewed did not
conduct audits in full accordance with OSHA procedures during fiscal years
2002 and 2003. For example, one region did not routinely conduct any
on-site audits, while two regions failed to include all of their area
offices in their audit reviews.
OSHA has recently taken a significant step to improve its oversight
efforts by establishing an Office of Evaluations and Audit Analysis (OEA)
to focus on ways to better use data from regional audits. The OEA is in
the initial planning stages. As the formation of OEA continues, officials
may want to consider incorporating the use of multivariate analysis into
efforts to better understand the factors that influence variation in civil
penalty amounts. Such a statistical model would allow OSHA officials to
determine how much of the variation in penalty amounts is due to
established factors and how much is due to factors that are not used in
penalty calculations. To explore the viability of such an analysis, we
calculated how gravity of violation and employer size affected penalty
amounts and found that these two factors explained 48 percent of the
variation that existed among proposed penalty amounts for serious
violations. Using final penalty amounts, we found that the model explained
36 percent of the variation.4 When we expanded this model to include
factors beyond those explicitly used in the penalty assessment process, we
found that these factors explained some, but far less, of the variation in
final penalties than the two factors above. For example, even after we
controlled for differences in gravity and employer size, some industries
were assessed penalties that averaged $257 more than others. Overall, this
model explained 39 percent of the variation for final penalties. We
recognize this model captures only some of the factors that influence
penalty amounts and understand that area directors are given discretion in
determining final penalties in response to employers' efforts to ensure
abatement and improve the safety of their workplaces. Nevertheless, we
think that with additional data on factors like employer history and good
faith, models like this could provide OSHA with insight into the extent to
which penalties are being assessed correctly (including the degree that
unexpected variables are affecting penalty amounts).
In a recently published GAO report, we recommended that OSHA create a
system to ensure that regions complete audits and that OSHA use audit
results to improve the consistency of the complaint process.5 Consistent
with those recommendations and on the basis of the findings presented
here, we are recommending that the Secretary of Labor direct the Assistant
Secretary for Occupational Safety and Health to
o ensure that regions complete audits in accordance with OSHA's required
audit procedures and
o monitor audit results in their overseeing of the civil penalty
determination and violation abatement processes.
In addition, we are recommending that the Secretary of Labor direct the
Assistant Secretary for Occupational Safety and Health to
o evaluate the feasibility of using statistical modeling to help OSHA
determine if penalties are being assessed correctly and identify if
unanticipated factors are influencing penalty amounts.
4For our research, final penalty is defined as an assessed penalty in a
case that has been closed.
5See U.S. General Accounting Office, OSHA Complaint Response Policies:
OSHA Credits Its Complaint System with Conserving Agency Resources, but
the System Still Warrants Improvement, GAO-04-658 (Washington, D.C.: June
18, 2004).
OSHA provided written comments on a draft of the briefing slides (see app.
II). We incorporated the agency's comments, including oral comments we
received during the briefing, into the briefing slides and this letter as
appropriate. In general officials agreed with our first two
recommendations regarding the better use of audit results, although they
questioned how we arrived at these recommendations. In particular they
were uncertain about which regions we reviewed and the magnitude of the
problems we identified. As documented in both the slides and this letter,
we based our findings on the key results of OSHA regional audits conducted
in the five regions with the most inspections during fiscal years 2002 and
2003. We reported on problems that appeared across regions and years but
did not report on the magnitude of the problems because the audits did not
always identify error rates or the total number of case files reviewed. We
commend OSHA for recognizing that more useful information can be gathered
from the audit reports.
Concerning the third recommendation, OSHA officials stated during the
briefing that the multivariate model could be useful but raised some
concerns in their oral and written comments. First, OSHA officials
questioned the validity of the model, given the fact that two of the
factors used in calculating penalty amounts could not be included.
Specifically, OSHA believed that these two missing factors would explain
additional variation among penalties and would decrease the amount of
variation we found attributable to nonstatutory variables. Though we
recognized that IMIS could not provide us with data on all four factors,
we pursued developing the model to test its potential value as an
oversight tool for OSHA. Based on the test, we believe that with
additional data, such as the two missing factors of history and good
faith, this type of modeling could provide OSHA with insight into the
extent to which penalties are being assessed correctly and the degree to
which unexpected variables are affecting penalty amounts.
OSHA was also concerned that the results of our model on final penalty
amounts did not appropriately capture the adjustments made by area
directors to proposed penalty amounts when employers abate their
violations and improve the safety of their workplaces. Currently, OSHA's
database does not capture area directors' negotiations of final penalties.
If OSHA chooses to explore the feasibility of using statistical modeling,
it may wish to consider the value of developing such a variable. On a
related issue, OSHA suggested that in this letter we provide the results
of the model for proposed penalty amounts, in addition to final penalty
amounts, to get a better sense of how consistently inspectors applied the
penalty factors. We added these results, which also showed a sizeable
amount of
unexplained variation in initial penalty amounts. Finally, OSHA was
concerned about the resources required to collect additional information
to make the model more robust. However, it is unclear at this time how
large the additional cost of this task would be, since the good faith and
history data are currently collected by the area offices and stored in the
same local data system from which other IMIS data are retrieved. As
requested by OSHA, we will be sharing our statistical model and
accompanying database with the agency so that it may further explore the
model's oversight potential.
We are sending copies of this report to the respective congressional
committees and to other interested parties and will make copies available
to others upon request. In addition, the report will be available at no
charge on GAO's Web site at http://www.gao.gov.
If you have any questions about this report, please contact me on (202)
512-9889 or Brett Fallavollita on (202) 512-8507. Mikki Holmes and Linda
Stokes, as well as Catherine Hurley, Julian Klazkin, Luanne Moy, and
Douglas Sloane, made significant contributions to this report.
Sincerely yours,
Robert E. Robertson Director, Education, Workforce, and Income Security
Issues
Appendix I: Briefing Presented on July 7, 2004
WORKPLACE SAFETY
AND HEALTH
OSHA's Oversight of Its Civil Penalty Determination and Violation Abatement
Processes Has Limitations
Briefing of Officials at the Occupational Safety and Health Administration, U.S.
Department of Labor, July 7, 2004
Appendix II: Comments from the Department of Labor
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