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INSIGHTS is our environmental, health and safety, and crisis management newsletter, made for our clients and friends.
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January 2009
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I. CONGRESSIONAL ACTION
1. LAWMAKERS OBJECT TO SETTLEMENT IN CINTAS WORKER’S DEATH Reps. Lynn Woolsey (D-CA) and Phil Hare (D-IL) have raised objections to a settlement between the Occupational Safety and Health Administration (OSHA) and uniform supplier Cintas, Inc. whereby the company will pay nearly $3 million in fines and institute safety measures. The agreement covers six cases involving the company’s failure to lock out hazardous energy sources on industrial laundry equipment during servicing. In one case, an employee at a Cintas plant in Oklahoma was killed when he fell into a dryer while trying to clear a jammed conveyor. Woolsey chairs the House Subcommittee on Workforce Protections and Hare is a Subcommittee member. They complained that the settlement does not hold Cintas responsible for the fatality and gives it too much time – two years – to address pre-existing hazards. Cintas has a history of repeated safety violations nationwide and giving the company two years to address pre-existing hazards “is unacceptable,” Woolsey said in a statement. She added that one of her top priorities as Subcommittee Chair in 2009 will be to “reform OSHA [and] strengthen its oversight and enforcement capabilities.” Besides paying the penalty, the agreement calls for Cintas to make what OSHA described as “substantial” safety and health enhancements at its commercial laundry facilities covered by OSHA. In addition, Cintas must certify that it has implemented immediate interim measures to protect employees working in the wash areas at these facilities. The company must also retain a team of independent safety experts to assist in enhancing Cintas’ safety policies and procedures.
2. MCATEER SUBMITS MINING REPORT TO TRANSITION TEAM J. Davitt McAteer submitted a report on mine safety and health to then President-elect Barack Obama’s transition team last month. McAteer, a transition team member and former Assistant Secretary for the Mine Safety and Health Administration (MSHA) during the Clinton Administration, interviewed representatives of the National Mining Association, National Stone, Sand & Gravel Association and Industrial Minerals Association-North America. He also talked to individual mine operators, labor leaders, miners, MSHA personnel, and others. The report is believed to be intended as a briefing paper on mining for the incoming Obama Administration. Contents of the document have not been disclosed, but McAteer said he expected it to be available eventually on the transition team’s website at www.change.gov. McAteer reportedly sought answers to questions on stakeholders’ perceptions of MSHA’s performance, as well as issues of importance to stakeholders and what they are doing to advance mine safety. During the interviews, mine operator representatives reminded McAteer of the industry’s improving safety record. Metal and Non-Metal interests noted the dissimilarities between them and coal and contended that those differences called for separate treatment on enforcement, regulatory or legislative matters. Commenters also suggested that MSHA redirect its inspector resources to focus on mines with the poorest safety records. Stakeholders expressed concern that MSHA’s push to meet its required 2's & 4's inspection mandate may lead to strains on its resources. Specifically, coal personnel said specialists whose jobs require them to review and approve specialized plans, such as for roof control and ventilation, may be pulled away to do inspections, thus potentially bogging down the system for plan approvals. Labor representatives worried that resource constraints could lead to cursory inspections. An industry representative asserted that the citation and assessment adjudication process is broken and requires immediate corrective action. Other industry officials complained about inconsistent MSHA enforcement and urged that collaboration replace confrontation in the new Administration. McAteer heard objections to MSHA’s proposed substance abuse rule, provisions of Senate-approved legislation to ban asbestos, and the S-MINER bill. On the other hand, union leaders voiced support for S-MINER legislation which gained House approval a year ago.
II. REGULATORY UPDATE
3. MSHA ISSUES FINAL RULES ON FLAME-RESISTANT BELTS, REFUGE ALTERNATIVES Closing yet another chapter on the MINER Act, MSHA met a congressionally-mandated deadline of Dec. 31 to issue final rules on flame-resistant conveyor belts and refuge alternatives. Both regulations apply exclusively to underground coal mines. Questions about compliance responsibilities under the new rules should be addressed to Henry Chajet (hchajet@pattonboggs.com; 202-457-6511). Flame-Resistant Conveyor Belts
Refuge Alternatives
4. OSHA FINALIZES MULTI-CITATION RULE OSHA finalized a rule last month to make it “unmistakably clear” that each employee covered by OSHA standards must receive required training and appropriate personal protective equipment (PPE) and that each individual failure to do so could subject the employer to a separate violation and penalty. The rule went into effect January 12. The agency said it was necessary to institute what it termed a “clarifying rule” after the Occupational Safety & Health Review Commission overturned per-employee citations OSHA had written against a Texas asbestos abatement contractor for PPE and training violations involving each of the contractor’s 11 employees. The rule adds new paragraphs to relevant regulations and includes changes to the language of some existing respirator and training requirements. In the preamble to the regulation, OSHA said the final rule does not address circumstances in which OSHA will or will not issue per-employee citations in particular cases. “The issuance of per-employee citations, like other types of per-instance citations, is a matter of prosecutorial discretion” that is outside the scope of the rule, the agency said. In practice, OSHA has reserved its per-employee citation policy to cases involving allegedly egregious employer behavior. Employer groups objected to the rulemaking due to concerns that OSHA might someday broaden application of the policy to cases other than those it considers egregious. The U.S. Chamber of Commerce protested because it said the rulemaking exceeded OSHA’s legal authority. Any court review of the regulation must be initiated within 60 days of the December 12 appearance of the rule in the Federal Register. Contact Henry Chajet (hchajet@pattonboggs.com) with questions or comments.
III. ENFORCEMENT
5. MSHA ACHIEVES 100% INSPECTION RATE For the first time in its 31-year history, MSHA met its "2's & 4's" inspection mandate in fiscal year 2008. The achievement is the outcome of an effort launched in October 2007 called the 100 Percent Plan, which aimed to meet the mandate within the year. At the time, MSHA provided figures showing a 95.1% average inspection completion rate nationwide in Coal in FY ’06 and, even worse, a rate of just 87.5% in Metal/Non-Metal (M/NM) in FY ’07. In a press release last month, Acting Assistant Secretary Richard Stickler said the Agency met its target through temporary reassignments, increased overtime, better oversight and tracking, and “dedicated employees.” MSHA has hired 360 new coal inspectors since July 2006, bringing the coal inspectorate to just three inspectors shy of 757. Funding for 55 additional M/NM inspectors was included in the FY ’08 budget. MSHA inspectors wrote 198,700 citations and orders in calendar ’08 and assessed $194 million in fines – both all-time highs. During the year, MSHA also wrote a record 74 flagrant violations – each carrying a maximum fine of $220,000 – amounting to $11.5 million. Given the beefed-up inspection workforce, expect even more of the same this year. The situation calls for pro-active development of a comprehensive compliance strategy. Contact Henry Chajet (hchajet@pattonboggs.com), Mark Savit (msavit@pattonboggs.com, 303-894-9239) or John Austin (jaustin@pattonboggs.com; 202-457-6167) for assistance.
6. VIRGINIA COAL OPERATOR GETS FIRST-EVER PATTERN NOTICE Patriot Mining, LLC was handed the first-ever pattern of violation (POV) notice by MSHA this fall due to an excessive number of allegedly serious (S&S) violations at its No. 2 underground mine in Southwestern Virginia. Patriot received a notice as a potential pattern violator in June but allegedly failed to significantly reduce its violation frequency rate during the ensuing three-month period, MSHA said in a media statement. The pattern notice was issued after Patriot was tagged with nine S&S violations during the quarter. The violations translated into an S&S rate of 10.94 per 100 inspection hours, above Patriot’s target rate of 9.00. Pattern violators risk the closure of any portion of the mine affected by a S&S citation written during the next inspection cycle. To get de-listed, a mine must go through a complete inspection free of S&S violations. Patriot contested the designation, and, after a hearing an administrative law judge modified two S&S violations, bringing Patriot’s total to below its target rate. MSHA quietly removed or de-listed the mine from its POV list after the judge's decision. Since June 2007, MSHA has notified 43 operators that they are potential pattern violators. Another round of notices is expected soon. It is absolutely essential that any operation receiving a POV warning engage the services of counsel right away. Patton Boggs’ attorneys stand ready to assist any operator who gets into this enforcement trouble.
7. APPALACHIAN MINING, TRUCKING FIRMS FEEL MSHA’S HEAVY HAND MSHA has taken significant enforcement action against mining businesses in Virginia and Kentucky. Guest Mountain Mining Corp. and its contract trucking firm, Bresee Trucking, received fines totaling $210,000 after a Bresee employee was seriously injured in a water truck accident at a Virginia mine last summer. Bresee was fined $165,000 for failing to provide task and hazard training to its employees and for failing to have adequate brakes on a water truck. The vehicle went out of control during watering operations along the main haul road. The employee was permanently disabled. Guest Mountain was cited for failing to provide hazard training and fined $45,000. In the other action, Liggett Mining, LLC agreed to pay $276,231 in past due penalties for violations at its five underground coal mines in Eastern Kentucky, MSHA said in a press release. Liggett had not paid fines on at least 300 citations since March 2007. The settlement is MSHA’s largest since the agency began advising mine operators that they could be subject to mine closures for failing to pay delinquent civil penalties.
8. FIRMS IN RHODE ISLAND, PENNSYLVANIA HIT WITH BIG OSHA FINES OSHA fined Rhode Island construction contractor John Rocchio Corp. $216,000 last month for allegedly willful and serious violations of excavation safety standards at a water line installation project. OSHA found two Rocchio employees working in an 8-foot-deep excavation without cave-in protection or a safe means to exit. Lloyd Industries, Inc. faces $140,760 in penalties after a follow-up to a comprehensive inspection performed in 2005. The firm, based in Eastern Pennsylvania, was cited for failing to provide elements of a hearing conservation program. Other citations were for improper recordkeeping, failing to guard a rivet machine, an electrical hazard, and not making the main exit accessible at its fire and smoke damper manufacturing facility. OSHA fined ConocoPhillips $116,500 after an inspection conducted as part of a National Emphasis Program focus on petroleum refinery process safety management. The company operates a 425-employee facility in the Keystone State. In an end-of-the-year report, OSHA said it conducted 38,591 inspections in FY ’08 and wrote 87,687 violations. The majority of the citations were for allegedly serious violations; i.e., those OSHA believes could lead to death or serious physical harm from a hazard which the employer knew or should have known about. The agency also reported conducting 121 inspections, each of which resulted in penalties exceeding $100,000, including the three mentioned.
IV. OTHER AGENCIES
9. IOM BEGINS PEER REVIEW OF NIOSH ASBESTOS ROADMAP The National Institute for Occupational Safety and Health (NIOSH) has engaged the National Academies' Institute of Medicine (IOM) to review the second draft of NIOSH’s asbestos roadmap. The document spells out the current state of the science and proposes a research plan to address unanswered questions about the cancer-causing mineral. The IOM review will assess the technical quality of the document, its scope, and the methods used to produce its findings. Its review is expected to be completed by the end of the year. The draft is a product of NIOSH’s research scientists supplemented by stakeholder comments and submittals, including an extensive set from the National Stone, Sand & Gravel Association.
10. SAFETY BOARD URGES ACTION AFTER TANK COLLAPSE The U.S. Chemical Safety Board (CSB) has issued a series of urgent recommendations after a two-million-gallon tank holding liquid fertilizer collapsed in November at a facility in Chesapeake, VA. Two contract workers were seriously injured and two others trying to rescue the victims were treated for injuries. The tank contained liquid urea and ammonium nitrate fertilizer. The material spilled over a containment dike and flooded sections of a nearby residential neighborhood, requiring soil remediation. Some 200,000 gallons of the fertilizer could not be accounted for, and some reached the Elizabeth River, a tributary of the Chesapeake Bay. CSB’s recommendations to tank owner Allied Terminals focused on three other tanks at the facility. All four tanks, which were built in 1929, were strengthened in 2006 by replacing vertical riveted seams on the walls. After investigators concluded the failure was likely due to welding failures, the CSB issued recommendations intended to assure the remaining vessels do not fail. The CSB recommended that Allied immediately reduce the hazard by lowering the maximum safe fill height and retaining a qualified tank engineering firm to assess the tanks’ safety. Allied should also develop a corrective action plan for any identified deficiencies, the CSB said. After the repair work and before the collapse, the company had hired an engineering firm to examine each tank in accordance with existing industry safety guidelines for petroleum tanks. The contractor’s report did not identify the welding defects. The collapse occurred while the tank was being filled to a level about three inches below the 27-foot safe fill height the contractor had recommended. The Board noted that there appeared to be a lack of a clear set of regulations nationwide covering aboveground non-petroleum storage tanks.
11. ROUNDUP OF ACCIDENT INVESTIGATIONS UNDERWAY AT CSB Besides the Virginia accident, the CSB continues to investigate seven other accidents that have occurred around the nation since October 2007. The accidents have claimed 36 lives and injured at least 62 others. The accidents include a pesticide waste tank explosion in West Virginia; a storage tank explosion in Wisconsin; rupture of a heat exchanger in Texas; a refinery accident, also in Texas; an explosion and fire at a gasoline additive manufacturing facility in Florida; an underground fire at a hydroelectric plant in Colorado; and, an explosion and fire at a sugar refinery in Georgia. The Georgia accident last February left 14 dead and 38 injured, several seriously, and led to calls in Congress for a regulation to control combustible dust. The CSB attributed that accident to what it described as “massive accumulations of combustible sugar dust at the facility.” V. COURTS
12. PATTON BOGGS WINS TRAVELERS INSURANCE CASE In an insurance coverage case, a U.S. District Court judge ruled December 22 that a directors’ and officers’ (D&O) policy written by the Travelers Casualty and Surety Co. covers a director who was sued for conduct undertaken when he was a major shareholder of the insured organization but before he became an officer or director. The ruling could subject Travelers to a seven-figure damage award in its dispute with Texas-based Julio & Sons Company. Patton Boggs represented Julio in the proceeding. The court held that its decision was compelled by Travelers’ “ambiguous” insuring clause. “It is the insurer’s responsibility to draft its policies with sufficient precision to avoid ambiguities like the one found here,” the judge wrote in a 23-page opinion. John Schryber (jschryber@pattonboggs.com; 202-457-6436) argued the case for Julio. He is the leader of Patton Boggs’ cost recovery and indemnification practice group.
13. SUPREME COURT TO HEAR ASBESTOS CASE INVOLVING INSURER In another case involving the Travelers Companies, the U.S. Supreme Court has agreed to reconsider reinstatement of a $500 million settlement of asbestos-related lawsuits against Travelers Indemnity Co. The settlement is intended to block any new lawsuits against Travelers arising out of its long-standing relationship with Johns Manville. (JM), once a major manufacturer of asbestos products. Travelers has been named in numerous lawsuits alleging that it tried to cover up the dangerous health effects from asbestos exposure. The insurer has argued that asbestos-related claims should be paid out of a trust created by JM in the 1980s and approved by a bankruptcy judge. Money for the fund came largely from insurers. Travelers agreed to settle several of the lawsuits, provided that it is shielded from new, similar litigation. An appeals court overturned a lower court’s approval of the settlement, saying a bankruptcy judge lacks such broad authority. The High Court will consider the question of the bankruptcy court’s power when it takes up the case in March.
American Coal Co. (AmCoal) has sued MSHA, accusing the regulatory agency of violating the United States Constitution, the Federal Mine Safety and Health Act, MSHA regulations and other federal laws. The allegations stem from MSHA inspections at the company’s Galatia Mine complex in Illinois. The lawsuit alleges that MSHA instructed its inspectors to issue violations based on quotas. MSHA also failed to notify AmCoal that inspectors were on-premises and failed to allow company representatives to be present during inspections, the company contends. In response, AmCoal filed a complaint with the Inspector General. This fall, MSHA assessed fines of nearly $1.5 million against the company for alleged safety violations at the operation. AmCoal said MSHA’s press release announcing the fine, plus “negative statements to the press by MSHA officials, demonstrates a clear pattern of animosity by MSHA toward the company.” Named defendants include MSHA chief Richard Stickler, Coal Administrator Kevin Stricklin, other MSHA management personnel and inspectors. AmCoal is a subsidiary of Ohio-based Murray Energy Corp.
15. GRACE TO PAY UP TO $140 MILLION IN VERMICULITE CLASS-ACTION SUIT W.R. Grace & Co. has agreed to pay up to $140 million to settle claims over the company’s sale of vermiculite insulation contaminated with naturally occurring asbestos. The material, sold under the brand name Zonolite, has been installed in millions of homes in the U.S. and Canada. Much of the vermiculite came from a Grace mine in Libby, Montana. The mine has been linked with asbestos exposure that has claimed the lives of more than 200 persons in the Libby area. EPA has declared Libby a Superfund site. Grace agreed to pay $30 million into a trust fund and make an additional $30 million payment three years later. It will also make ten additional annual payments of $8 million each if certain conditions are met. Six executives of the Maryland-based specialty chemical manufacturer also face criminal charges for alleged violations of the Clean Air Act in connection with the Libby exposures. That trial is scheduled to get underway next month.
16. ASBESTOS LITIGATION EXPECTED TO GROW The next big wave of asbestos litigation may well be underway. After several years of declines due to changes triggered by tort reform advocates, the asbestos caseload is up in liberal, pro-plaintiff venues such as Los Angeles, San Francisco, Delaware, and Illinois. In plaintiff-friendly Madison County, Illinois, for instance, 639 asbestos-related cases were filed last year, up by almost 200 from the year before. The uptick has been called “troubling” by an official of a tort reform group. A local newspaper, the Telegraph, quoted a circuit judge who oversees the court’s asbestos docket as saying lawyers on both sides of such litigation tell him the caseload nationwide is expanding. Driving the change is a pot of some $40 billion in court-established trust funds, where settlements are made relatively easily. Volumes of legal briefs and mounds of paperwork have been replaced by online processing forms. The only way to stop the trend is to challenge cases in court, but, fearing huge jury awards, defendant companies have been wary of doing that. More than 80 companies have filed for bankruptcy in the past because of the surge in asbestos litigation. The Manhattan Institute has called asbestos litigation “the longest-running mass tort in U.S. history and arguably the most unjust.”
17. CRIMINAL, CIVIL SETTLEMENTS REACHED IN ALMA FIRE CASE Criminal and civil lawsuits brought against a mine operator as a result of a January 2006 fire that killed two West Virginia coal miners were settled last month. In an agreement between MSHA, the U.S. Attorney for the Southern District of West Virginia and Aracoma Coal Co, the operator agreed to pay a record $4.2 million in criminal penalties and civil fines in the case. The U.S. Attorney said the criminal investigation continues, with charges still possible against individual mine employees. Aracoma pled guilty to ten criminal charges, including one felony, and agreed to pay $2.5 million in criminal fines. A federal judge must approve the criminal plea before it can be finalized. The company also agreed to pay $1.7 million in civil fines to settle alleged safety violations. The agreement resolves more than 1,300 alleged safety violations at Aracoma’s Alma No. 1 mine, where the accident occurred, and at its nearby Hernshaw Mine that were written by MSHA since the January 19, 2006 fire, according to court documents. The civil fine represents a 40% reduction from the $2.8 million amount originally assessed by the agency.
VI. OTHER
18. CHANGING OF THE GUARD AT MSHA, OSHA
With the inauguration of President
Obama, stakeholders await the announcement of new political
appointees to head both MSHA and OSHA and to occupy other leadership
positions in the Department of Labor. President Obama nominated
Congresswoman Hilda L. Solis (D-LA) to serve as the Secretary of
Labor. Rep. Solis has a long history of supporting labor, and unions
across the country have applauded her appointment. During her
January 9 Senate confirmation hearing, Senator Lamar Alexander
(R-TN) asked Rep. Solis for her views on certain right-to-work laws.
In response, Rep. Solis said that she was “not qualified” to speak
on that issue. She also said that she was not prepared to speak for
the Administration on the highly controversial Employee Free Choice
Act, also known as the “card check” bill.
The Patton Boggs Health and Safety Law Group consists of attorneys who have resolved client problems in environmental, energy, natural resource, and safety and health law since the late 1960s. With domestic offices in Washington, D.C., Northern Virginia, New Jersey, New York, Dallas, Denver, Alaska, and internationally in Doha, Qatar and Abu Dhabi, United Arab Emirates, our lawyers we have experience with EPA, OSHA, MSHA, NIOSH, DOT, OPS, Coast Guard, NTSB, FAA, FDA, CSP, the Chemical Safety Board, and almost every other federal and state government environmental, health, and safety agency here and in many foreign governments around the world. We speak a variety of languages; have backgrounds in business, science, engineering, industry, and government; and combine preventive law counseling with courtroom and lobbying expertise to achieve results. For more information go to: http://www.pattonboggs.com or contact Henry Chajet (hchajet@pattonboggs.com) at 202.457.6511, Mark Savit (msavit@pattonboggs.com) at 202-457-5269, or John Austin (jaustin@pattonboggs.com) at 202-457-6167 Important Note: This newsletter does not constitute legal advice and counsel should be consulted regarding specific factual situations which will determine the compliance advice applicable to any particular question regarding the subject matter. If you would like additional information or advice and counsel on training, compliance or audits, please let us know. You may receive INSIGHTS from other people, which often occurs. To SUBSCRIBE, change your address or to change your e-mail format, simply click here. To UNSUBSCRIBE or OPT-OUT, simply e-mail INSIGHTS@pattonboggs.com with "UNSUBSCRIBE" in the subject line. To correspond with INSIGHTS, send your message to INSIGHTS@pattonboggs.com. Thanks. |
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