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After Five Fatalities, OSHA Fines Formosa Plastics $300,000

In one of the most significant settlement agreements of the year, OSHA has reclassified all three willful citations issued to Formosa Plastics Corp. following an April 2004 explosion at the company's Illiopolis, Ill., plant that killed five workers, seriously injured three others and destroyed much of the facility.

The willful citations have been changed to "unclassified;" OSHA also reduced the original penalty of $361,500 to $300,000, and downgraded seven of the 43 serious citations.

While the April 4 OSHA press release on the settlement states, "changing citation classifications has no bearing on any other related litigation that might arise," other OSHA officials and legal experts maintain that in practice unclassified citations can be more difficult to prosecute, both criminally and civilly, than willful citations.

An OSHA spokesperson said the agency could, in theory, refer unclassified fatality violations to the Department of Justice for criminal prosecution, but in practice they are less likely to be pursued than willful citations. Section 17(e) of the OSH Act allows for criminal penalties "for any employer who willfully violates any standard, rule or order" when the violation causes the death of an employee.

"It would seem that if you had an unclassified citation it would weaken the criminal case," commented Doug Kalinowski, director of the Michigan Occupational Safety and Health Administration.

A Formosa spokesperson said the company understands the settlement agreement to mean that OSHA will not refer the case for criminal prosecution, but that it will have no bearing on civil litigation.

Several attorneys disputed this as well, however, pointing out that an OSHA willful citation can make it easier for victims or their families to sue the company when employees are hurt or killed at work.

"I think one could argue that a willful OSHA citation could provide greater support for the right of recovery of a victim's family in a civil lawsuit, than an OSHA unclassified," commented Douglas Crim, an attorney in the Lansing, Mich., firm of Miller Canfield.

In exchange for the reduction in penalties and the elimination of the willful citations, Formosa dropped its lawsuit opposing the enforcement action and agreed to:

  • Hire at least one independent consultant with expertise in chemical process safety management (PSM) to help design a new facility;
  • Retain a PSM specialist to help train Formosa workers;
  • Conduct audits at its other polyvinyl chloride manufacturing facilities to make sure hazards OSHA found in Illiopolis don't exist elsewhere.

Formosa spokesperson Rob Thibault said that from the beginning the company disagreed with the OSHA citations, and maintained that the plant operated safely. "There are processes in place to allow companies to sit down with OSHA," said Thibault. "The process worked, we settled, kept legal costs down and now are moving ahead."

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