Powell Trachtman Logan Carrle & Lombardo

Design Professional's Practice Bulletin

Volume 2, Number 1 — February 1998

This Bulletin addresses recent developments affecting Design Professionals as well as business concerns as important as the specific professional and technical issues they face.

Editors: Neil P. Clain and Richard J. Davies

Design Professionals' Liability For Violation of OSHA Construction Standards Expanded

By Neil P. Clain, Jr.

Design professionals may be subject to liability for violation of OSHA construction standards despite contracts that assign safety responsibility solely to the general contractor, according to two recent opinions issued by the Occupational Safety and Health Review Commission ("OSHRC"). The OSHRC ruled that "where an engineering or architectural firm (1) possesses broad responsibilities in relation to construction activities, including both contractual and de facto authority, relating directly to the work of the trade contractors, and (2) is directly and substantially engaged in activities that are integrally connected with safety issues, the construction standards will apply, notwithstanding contract language expressly disclaiming safely responsibility."

OSHA construction standards apply to "every employment and place of employment of every employee engaged in construction work." Whether the activities of a non-trade contractor, such as an architect or an engineer, justify a finding that it is "engaged in construction work" was addressed in a limited number of cases before the OSHRC's recent decisions.

Liability was imposed in the earlier cases upon design professionals who were judged to be acting as construction managers by virtue of possessing supervisory authority over the progress of the work and work site safety programs and performing management functions similar to those of a general contractor. For example, liability was imposed where the architect's duties included inspection of the trade contractors' work to ensure its conformance to contract and design specifications, and the architect had the authority to stop work if it encountered a safety hazard. In another case involving a construction manager with broad authority that reflected "general managerial responsibility" for the project, liability was imposed despite the lack of an express delegation of responsibility for safety because its broad contractual authority "provided the ability to effectuate abatement of hazardous conditions." Design professional liability was rejected in cases where the design professional's involvement in the project was limited to preparing contract specifications and inspecting the work for conformity with the specifications.

SEC'Y OF LABOR V. CH2M HILL CENTRAL, INC.

In Secretary of Labor v. CH2M Hill Central, Inc. ("CH2M"), the issue was whether an engineer with extensive project responsibilities but whose contract expressly excluded any responsibility for safety measures was liable for OSHA construction standard violations. The administrative law judge who presided over the initial hearing relied upon express contractual limitations of CH2M's responsibility for safety measures and the express contractual delegation of sole responsibility for safety measures to the general contractor to dismiss the charges against CH2M.

The OSHRC reversed on appeal, finding CH2M liable for the construction standard violations despite its contract. In a lengthy but often puzzling opinion,the OSHRC reviewed CH2M's role in the project to conclude that CH2M was subject to the construction standards because of its pervasive contractual duties on the project and because of its active involvement in resolving safety issues. The factual detail presented in the opinion is extensive, but the OSHRC's analysis leaves in doubt which facts it considered essential to its ruling. Very briefly stated, CH2M was cited for OSHA violations in connection with a methane gas explosion that killed three employees of the general contractor. CH2M was retained by the Milwaukee Metropolitan Sewerage District ("Owner") to serve as the consulting engineer in a multi-billion dollar storm drainage and sewerage project that included the construction of several tunnels. CH2M's master contract provided a broad range of potential services for which the Owner could contract by way of "task orders" for each discrete portion of the project. (The project involved hundreds of separate construction contractors working on different portions of the project. CH2M was assisting the Owner in managing the entire project.)

The accident occurred during construction of a tunnel, a portion of the project for which the Owner directed a task order to CH2M and executed a contract with the general contractor ("General Contractor"). Under the task order, CH2M was to advise the Owner during the preconstruction stage and prepare bid and award documents for the Owner, administer the construction contracts, investigate and evaluate all disputes and contractor claims and requests for deviation from the contract documents, negotiate contract modifications with the contractors and prepare the appropriate contract language, monitor and review project schedules, inspect the work for conformance with contract documents and specifications, prepare and submit recommendations for acceptance of and payment for contractor's work by the Owner, and provide certain geologic consulting services. CH2M had no right to stop work due to defects or nonconformance of the work with the project documents; the Owner alone possessed that right.

The General Conditions of the General Contractor's contract designated CH2M as the Owner's representative during construction, with CH2M's authority limited to rejecting defective work, interpreting project scheduling requirements and establishing necessary priorities for resolving conflicts between contractors, and ordering minor changes in the work involving neither extra costs nor time extensions.

The Owner's contracts with CH2M and the General Contractor were unequivocal in assigning the entire responsibility for project safety to the General Contractor. For example, CH2M's master contract provided, among many other such clauses, that its day-to-day inspection or construction management activities would "not...cause [CH2M] to be responsible for those duties and responsibilities which belong to the construction contractors," including "safety precautions."

When methane gas was detected in soil borings taken in another nearby tunnel project involving a different general contractor, the Owner authorized CH2M to draft a modification to the General Contractor's contract to deal with this differing site condition. CH2M drafted a contract modification requiring the General Contractor to provide increased tunnel ventilation, additional methane monitoring, and an evacuation plan, and to eliminate ignition sources on the General Contractor's machinery to comply with OSHA requirements relating to the explosion-proofing of equipment. CH2M later issued a "clarification" to the General Contractor regarding the equipment to which the OSHA requirements applied.

The General Contractor went forward with the work under the revised contract. When methane was encountered, the tunnel was evacuated but, contrary to the General Contractor's written evacuation plan, electrical devices were not turned off and the General Contractor's employees did not wait for an hour before returning to the tunnel. Three of the General Contractor's employees returned prematurely to the tunnel and were killed when the methane ignited. CH2M employees were not consulted about the evacuation and they were not present during the evacuation or durtrig the General Contractor's return.

CH2M and the General Contractor were cited for numerous violations of OSHA's construction standards based on allegations that the electrical equipment and circuits in the tunnel were not approved for hazardous locations, that employees were not trained in the explosive and toxic gas hazards associated with tunnel construction,and that the ventilation in the tunnel was inadequate.

CH2M challenged the citations. The OSHRC considered "the extent to which the employer is involved in the multitude of different sorts of activities that are necessary for the completion of the typical construction project and the degree to which it is empowered to direct or control the activities of the trade contractors" to determine whether CH2M fell within the scope of the construction standards. The OSHRC pointed to CH2M's "broad and comprehensive responsibility in many aspects" of the project, its administrative responsibilities that encompassed a wide variety of managerial matters such as scheduling; coordination of construction activities; preparation, interpretation and modifications of contract documents including negotiation with trade contractors; claims processing; and dispute resolution. The "broad, global nature" of CH2M's role satisfied the first element of the OSHRC's test.

The second element of the test was satisfied by CH2M's power to control trade contractor activity through its right to "establish and enforce project scheduling" and to "order that questioned work be examined and to reject and obtain the correction of defective work," even though CH2M lacked authority to stop the work.

Contract language imposing sole responsibility for safety measures and construction means and methods upon the General Contractor provided no protection for CH2M. "CH2M's many affirmative responsibilities and its authority clearly implicated safety, as did the exercise of its authority. In finding the construction standards applicable, we do not do so based upon a presumption that a broad scope of duties necessarily implies responsibility for safety as well." Instead, the OSHRC focused on "an extensive record which illuminates specifically how safety concerns and safely issues were resolved in actual practice at the work site in question" CH2M's liability derived from both its de facto control over safety issues and its contractual authority. "[I]n terms of its de facto actions, CH2M effectively was the nerve center through which means were developed and implemented for allowing the work to be conducted in the light of a major safety hazard for a tunneling operation, the presence of methane gas. In terms of its contractual authority, CH2M was required to review and approve necessary actions, including the General Contractor's safety program."

SEC'Y OF LABOR V. FOIT-ALBERT ASSOCIATES

Liability for OSHA construction standard violations was not imposed upon a engineering subconsultant to an architect in Secretary of Labor v. Foit-Albert Associates (decided on the same day as CH2M), in which an engineer with limited project involvement expressed opinions about matters implicating safety that did not fall within the scope of his contractual engagement. The engineer's contract with the architect, which was "based on" AlA Document C727 (Standard Form of Agreement Between Architect and Consultant for Special Services), provided that the engineer would notify the architect and the owner, not the contractor, about defects in the work, and that the engineer was not responsible for the acts or omissions of the architect or the contractors. One of the engineer's inspectors also testified that representatives of the architect and the owner advised him that he could not order work to be stopped.

The engineer's contract included an obligation to inspect certain work of trade contractors to ensure that it conformed to contract specifications. The engineer's inspection duties included inspection of formwork to be used in a cast-in-place concrete process, but did not extend to the shoring erected on each floor to support the formwork. Although not required to so by its contract, the engineer examined the shoring in its inspections and addressed the shoring in reports and comments resulting from those inspections. During an inspection of the formwork for one of the concrete pours, the engineer observed that the contractor's shoring appeared to be inadequate. This observation was communicated in writing to the architect, which in turn relayed it to the general contractor. Thereafter, the engineer wrote directly to the general contractor that it had "noted several deviations from the approved shoring details on this project." The engineer later pointed out deficiencies in the shoring when he went to the site with the president of the shoring subcontractor. The engineer personally observed a subsequent pour and brought deviations from the specifications to the contractor's attention; the noted deficiencies were corrected by the contractor.

The engineer was unable to inspect the formwork for the next concrete pour because of a scheduling conflict. The concrete from that pour collapsed onto the floor below due to inadequate shoring and injured several workers.

The OSHRC concluded that "inspection activity alone is not a sufficient basis on which to subject a non-trade employer to the construction standards." The engineer's voluntary involvement in safety issues outside the scope of its contract did not alter this finding." To the extent that [the engineer] raised safety issues beyond mere compliance with design specifications, we cannot conclude on these facts that by so doing [the engineer] exercised substantial supervision over construction work within the meaning of . . . CH2M." Though the inspection of work being performed on a job site "may implicate matters relating to safety," the OSHRC held that "merely . . . by making known its concerns about safety [the engineer] did not manifest the ability to control or direct matters of safety." Its warnings about the shoring on a previous concrete pour "were an incidence [sic] of [the engineer's] inspection responsibility and did not arise to the level of supervisory responsibiity for the implementation of safety measures and safety precautions at the site."

The OSHRC discounted instances during the project when the engineer intervened directly in contractor activities, such as when it refused to allow a concrete truck to make a delivery because the concrete was judged to be defective or when its personnel performed physical labor such as tying rebar and installing metal brackets to raise the rebar off the formwork. The engineer "took these measures in order to implement and complete its contractual inspection obligation rather than as an attempt to control or direct the work," and these activities represented an "incidental" rather than a "substantial" portion of its site activities.

Although the majority believed that the facts in the Foit-Albert case contrasted "sharply" with the facts in the CH2M case, one commissioner noted in a concurring opinion in Foit-Albert that she regarded the two cases as indistinguishable in any substantive respect. (The concurring commissioner filed a dissenting opinion in the CH2M case.)

CONCLUSION

These two opinions make clear that design professionals face heightened exposure to OSHA construction standard liability, and that the line separating culpable conduct from nonculpable conduct is not clearly drawn. As noted by the OSHRC, "[t]he distinction between those covered by the standards and those not within the purview of the standards may be a matter of degree rather than the kind of control over construction activities." Liability for violations of OSHA construction standards may result despite a contractual delegation of safety responsibility to others, and "the more extensive the involvement of a professional engineer or consultant in the activities at the site, the more likely that those activities will necessarily encompass safety issues."

strong>Note: In December 1997, United States Court of Appeals for the Seventh Circuit rejected as premature CH2M's petition to review the OSHRC's decision because no "concrete adverse action" against CH2M resulted. (The OSHRC returned the case to the administrative law judge for further proceedings; it did not affirm, modify or vacate the Secretary of Labor's citation to CH2M.)

This bulletin is intended for general information purposes only and does not constitute legal advice. The reader should consult with legal counsel to determine how laws, suggestions and illustrations apply to specific situations.