Vacating citations against a Texas company, an administrative judge has lambasted the Occupational Safety and Health Administration for having “fallen short of any standard of decency, honor, or reliability” by citing the company for alleged violations occurring during a period in which OSHA had agreed in a written settlement the company could establish a program to prevent such violations.

Administrative Law Judge Patrick B. Augustine of the Occupational Safety and Health Review Commission granted International Shipbreaking Limited, LLC (ISL) summary judgment, saying OSHA was equitably barred from seeking to enforce the new citations. The decision also erased a $22,300 penalty. ALJ Augustine’s June 23 ruling (Sec’y of Labor v. Int’l Shipbreaking Ltd., LLC, OSHRCJ, Nos. 14-0031 & 14-0032, 7/27/15), was issued by the Commission, without review, as a final order on July 27. The government retains the option of appealing to the U.S. Court of Appeals for the Fifth Circuit, in New Orleans.

Applied only sparingly against the government, “equitable estoppel” may be appropriate when one party is denied a benefit after it has reasonably relied upon the misrepresentations of another party. Referencing court precedent, Augustine explained that equitable estoppel here, among other things, requires proving the government engaged in affirmative misconduct. That, in turn, requires a showing of intentional wrongdoing or reckless conduct. ISL contended that because it had breached the settlement agreement by conducting inspections during the mutually agreed-upon abatement period, OSHA should be equitably estopped from pursuing litigation.

In July 2013, OSHA inspected two ships the company was breaking up for scrap, eventually issuing citations for alleged electrical violations. The enforcement action came two weeks after the agency and the company had come to terms on an agreement giving ISL 60 days to institute an electrical safety check program, designate a competent person to inspect electrical components, hire a certified electrician, and institute an equipment-grounding-conductor program. Electrical equipment inspections were to be conducted and documented at least quarterly. In return, OSHA agreed to drop a host of citations for alleged violations involving electrical infractions, personal protective equipment, fall protection, fire prevention, and others issued in November 2011.

OSHA asserted the 2013 inspections were conducted as part of its National Emphasis Program (NEP) on shipbreaking, the citations were not covered by the 60-day abatement period in the settlement agreement, and, if it were estopped from pursuing its litigation, ISL would have a “free ride” to continue violating the law. The agency also claimed it was merely a coincidence that its inspectors visited the ships so soon after reaching the settlement.

ALJ Augustine disagreed. He determined OSHA’s NEP argument was hollow because, despite the NEP, OSHA had discretion not to inspect some ships being broken down. In addition, inspections of the two ships could have taken place either before or after the abatement period, since the dismantling process was expected to take 11 months. Besides, the judge observed, of the 21 points on which the NEP is supposed to focus, none include electrical violations, even though these were the only violations OSHA reported. Finally, Augustine was “troubled” that OSHA had engaged three times as many compliance officers for the July 2013 inspections as it had committed in 2011. “Contrary to [OSHA’s] argument, … the Court finds that there are simply too many coincidences to be coincidental,” Augustine said.

As for OSHA’s contention that the settlement agreement did not address or apply to the specific electrical violations the agency found, Augustine called that argument “patently unreasonable,” “inconsistent,” “disingenuous,” and “an intentional misrepresentation” of the agreement’s abatement provisions.

He also swept away OSHA’s “free ride” contention. The agreement, he said, was a far-reaching attempt to address electrical hazards and included a clause allowing OSHA to enter ISL’s workplaces after the abatement period ended to verify that conditions contained in the citations had been corrected. The language also committed ISL to continue good-faith efforts to comply with the law, Augustine said. ISL estimated its abatement costs came to $1.25 million.

Why would such a provision be included if not to reaffirm ISL’s responsibility to correct hazards and comply with the law during the abatement period, Augustine asked. He added, “Given the expense involved and the comprehensive nature of the abatement, the 60-day period could hardly be classified as a free ride. ... [OSHA] acted recklessly, if not intentionally, in depriving [ISL] of a mutually bargained-for right to reasonable abatement.”