Workplace Safety and Health
OSHA's Oversight of Its Civil Penalty Determination and Violation Abatement Processes Has Limitations Gao ID: GAO-04-920 August 13, 2004This 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.
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.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-04-920, Workplace Safety and Health: OSHA's Oversight of Its Civil Penalty Determination and Violation Abatement Processes Has Limitations
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Report to the Secretary of Labor:
United States Government Accountability Office:
GAO:
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:
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:
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:[Footnote 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.[Footnote 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 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.[Footnote 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
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.[Footnote 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.[Footnote
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:
* ensure that regions complete audits in accordance with OSHA's
required audit procedures and:
* 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:
* 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.
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,
Signed by:
Robert E. Robertson:
Director, Education, Workforce, and Income Security Issues:
[End of section]
Appendix I: Briefing Presented on July 7, 2004:
[See PDF for images]
[End of slide presentation]
[End of section]
Appendix II: Comments from the Department of Labor:
U.S. Department of Labor:
JUL 28 2004:
Assistant Secretary for Occupational Safety and Health:
Washington, D.C. 20210:
Mr. Robert E. Robertson:
Director, Education, Workforce and Income Security Issues:
United States Government Accountability Office:
441 G Street NW, Room 5930:
Washington, DC 20548:
Dear Mr. Robertson:
The Occupational Safety and Health Administration (OSHA) has received
your summary of the oral comments in response to the briefing provided
by Government Accountability Office (GAO) officials on July 7, 2004. I
thank you for the opportunity to respond on behalf of the Agency.
The Agency recognizes the extensive work conducted by GAO on this study
and the utility of some of the information presented to OSHA. However,
the Agency would like to point out some of the shortcomings of your
methodology and findings.
As you note in your presentation, the Agency does see the merits of the
regions completing audits in accordance with Agency audit procedures,
and the need to monitor audit results in the regional offices. However,
OSHA is unclear about how GAO arrived at these recommendations. For
instance, there is some discussion of visiting five regional offices to
review case files, but it is unclear to the Agency which regions were
visited; further, the magnitude of problems discovered in each of the
regional offices is difficult to assess without knowing the error rate
or the total number of case files reviewed. Given that OSHA examines
the penalty determination and violation abatement processes both
locally and regionally, GAO's finding that OSHA provides limited
oversight of these processes is perhaps far too generalized statement.
Nevertheless, the Agency recognizes that more useful information could
be gathered from the audit reports and OSHA has started to look at how
best to do that.
OSHA's main policy goal has always been to reduce injuries and
illnesses through the elimination of workplace hazards, not to assess
or collect penalties. To meet the demands of the possible application
of over 3,000 standards to more than seven million workplaces covered
by the Occupational Safety and Health Act, the Agency must employ its
enforcement resources with maximum efficiency. While OSHA has delegated
its authority for overseeing its enforcement and program activities-
including penalty assessment-to the regional offices, this is not a
complete delegation of authority.
The Agency needs some flexibility in assessing final penalties to
reward the willingness of some employers to abate a hazard quickly and
produce a safer workplace. Using a statistical model to measure the
variance in final penalties does not adequately recognize the policy
reasons for the variance. Moreover, OSHA would point out that GAO's
statistical model, even with the addition of data on history and good
faith, would not determine whether penalties are being assessed
correctly, as suggested in the study summary; instead, the model simply
identifies factors associated with variance in penalty amounts.
As you have noted, the Agency applies four factors to the determination
of appropriate penalty amounts before penalties are assessed. The
absence of two of those four factors from your multivariate regression
model raises strong concerns about the validity of the results produced
by your model, and, therefore-due to the prominence of your statistical
model in the study - the validity of your study. The Agency questions
whether you would find the same variations in penalty amounts if your
statistical model contained good faith and history, which lead to a
prescriptive variance in penalties due to the Agency's policy goal of
producing a safer workplace.
(Furthermore, focusing the statistical model on measuring the variance
in final penalties instead of initial proposed penalties resulted in
less explained variance.) Because GAO did not control for all of the
penalty-calculation factors along with the other non-statutory factors
identified for its statistical model, OSHA is unsure how GAO can
conclude that non-statutory factors had "significant effects" on final
penalty amounts. Moreover, it is difficult to assess how significant
the variations are without the benefit of reviewing the entire
distribution of proposed penalty amounts and final penalty amounts;
however, GAO seems to recognize that OSHA cannot eliminate all
variations due to what can be termed non-statutory factors.
For the reasons stated above, OSHA has requested a copy of the database
used for this study for further examination. The Agency would
appreciate a mention of this request in the report to accompany the
presentation slides and requests that this letter be printed in full in
GAO's final report.
Thank you for the opportunity to comment on your study. If you have any
further questions, feel free to contact me at 693-2400.
Sincerely,
Signed by:
John L. Henshaw:
[End of section]
FOOTNOTES
[1] Under 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.§§ 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.
[2] 29 U.S.C. § 666(j).
[3] For 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.
[4] For our research, final penalty is defined as an assessed penalty
in a case that has been closed.
[5] See 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).
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