COLUMBIA, S.C. (Legal Newsline) - South Carolina faces another hurdle as it refuses to increase penalties for labor violations, which the federal government says it is required to do.
The federal government has doubled the maximum amounts of federal civil penalties that can be imposed by the Department of Labor and the Occupational Safety and Health Administration. It says the OSH Act requires states to do the same to continue running their state OSHA plans (22 states run their own plans).
Gov. Henry McMaster has twice challenged that argument in federal district court. Judge Sherri Lydon ruled against him last year, finding the penalty increase wasn't a reviewable agency action under rulemaking laws.
His second suit now faces another motion to dismiss, filed Aug. 30 through the DOL's acting secretary, Julie Su, who has headed the agency for years under President Joe Biden despite never earning confirmation in the U.S. Senate.
The DOL says the increases were imposed to account for inflation and South Carolina's challenge to them are in the wrong court. If the DOL were to withdraw approval of the state's OSHA plan, South Carolina could seek review in the U.S. Court of Appeals for the Fourth Circuit and not a district court.
"Plaintiffs can still obtain meaningful review of their claims in the Fourth Circuit; their claims would be integral, not collateral, to any feared withdrawal of approval by OSHA; and interpreting its own regulations and the statute it administers are well within OSHA's expertise," the DOL's motion says.
"Plaintiffs cannot, therefore, circumvent the OSH Act's scheme by bringing a pre-enforcement challenge in district court."
The OSHA Act started in 1970 and its maximum civil penalties were amended in 1990. South Carolina's plan was consistent with federal regulations for years, imposing maximum penalties of $70,000 and $7,000, depending on the type of workplace safety violation.
But in 2015, the Federal Civil Penalties Inflation Adjustment Act was signed into law by President Barack Obama. It immediately increased penalties then allowed agencies to go even further each year.
By 2023, OSHA's maximum penalties were all the way up to $156,259 and $15,625. South Carolina has not matched these amounts and worried that OSHA's regulatory actions against Arizona would happen to it, too.
OSHA had proposed a rule to withdraw approval of Arizona's state plan, but that ended with the state making some changes in early 2023. A month later, McMaster filed his second lawsuit against the DOL.
Though OSHA considers whether state penalties are at least as effective as federal penalties. In 2016, OSHA amended the OSH Act to require states to increase their penalties to reflect federal increases because the state penalties would then be "as effective" as federal.
"The 2016 Interim Final Rule contained no explanation for why a state plan would not be effective if state civil penalties were not identical..." McMaster's lawsuit says.
It's up to state lawmakers to change the penalties in South Carolina law, the suit added. They haven't.
It took until 2022 for OSHA to complain about South Carolina's penalties even though they had been under the federal level since the 2015 Inflation Adjustment Act. After the 2023 increase, OSHA told South Carolina to declare by March 15 of that year whether it would adopt the new penalty amounts.
"The only purported justification offered anywhere in the 2016 Interim Final Rule for requiring state plans to adopt civil penalties that are identical to or at least as great as federal civil penalties is Defendants' assertion that increased penalties will have a greater deterrent effect," South Carolina says.
"This simplistic and conclusory claim ignores the fact that diligent administration and enforcement by state plans can still result in 'safe and healthful employment and places of employment' as federal standards..."
OSHA failed to consider costs of living across the country, the suit says. It adds that South Carolina workplaces have reported fewer injuries and illnesses than the national averages while imposing weaker civil penalties.
The case was stayed while the U.S. Supreme Court decided Corner Post, Inc. v. Board of Governors of the Federal Reserve System. That claim impacts whether South Carolina is too late to challenge OSHA's 2016 rule that required state penalties be as high as federal.
The Corner Post ruling said a North Dakota truck stop could challenge a regulation issued 13 years earlier. It found the six-year statute of limitations did not begin to run until the regulations injured Corner Post.
Liberals on the Supreme Court dissented and worried of "staggering" implications. In South Carolina's case, the DOL argues the finding doesn't apply.
"OSHA has not 'enforce[d]' its regulations against South Carolina, other than by telling Plaintiffs - clearly and repeatedly over the past seven years - that they had to comply with OSHA's rules (and issuing findings when they did not)," the motion to dismiss says.
"And the Court has already ruled, correctly, that OSHA's annual re-publication of the adjusted penalties is not 'agency action' subject to review under the (Administrative Procedures Act).
"What 'regulatory enforcement,' then, are Plaintiffs challenging? The only final agency action they identify in their complaint is the July 2016 amendment to OSHA's regulations. But if that is the alleged source of the State's harm - as it must be - then it is too late to seek relief."