After involvement of Gibbons appointee, violations, fines in case of Orleans workers’ deaths were reduced

By Alexandra Berzon

Fri, Apr 18, 2008 (2 a.m.)

State safety officials sharply reduced violations and fines against the Orleans for its role in two worker fatalities last year after one of Gov. Jim Gibbons’ top political appointees became involved in the investigation, the Sun has learned.

The reduction removed a tough but rare finding of willful disregard for safety that would have permanently marred the record of the owner of the Orleans, Boyd Gaming Corp., and could have exposed the company to costly lawsuits or fines in the future.

To reduce the citations, the Nevada Occupational Safety and Health Administration negotiated a series of maneuvers that broke significantly from normal department procedures. Boyd is a major contributor to Gibbons election campaigns.

The case so angered Boyd’s safety manager, Don Barker, and OSHA inspector John Olaechea, who investigated the accident, that both men quit their jobs.

The head of Nevada OSHA, Tom Czehowski, said this week that never in his seven years at the agency has he seen other state officials insert themselves into an OSHA case.

An OSHA spokeswoman confirmed Thursday that Boyd had asked one of Gibbons’ appointees to become involved. She is Mendy Elliott, director of the Business and Industry Department, which includes OSHA.

OSHA goes easy (3-31-2008)

Elliott, in turn, reached out to a top official in Gibbons’ office, Dianne Cornwall, his chief operating officer. A third state official, Roger Bremner, the administrator for the Industrial Relations Division, which directly oversees OSHA, was also uncharacteristically involved in the case.

Boyd representatives and the state officials involved told the Sun this week they had done nothing remotely improper, and said the case was a victory for the state because it was able to push Boyd to complete a major overhaul of its safety procedures.

Gibbons received at least $45,000 from Boyd Gaming and related interests in his 2006 race for governor and nearly $40,000 in his congressional campaigns dating to 1996.

The Sun reported last month that OSHA has repeatedly withdrawn or reduced citations against construction companies in cases stemming from nine construction deaths on the Las Vegas Strip over the last 16 months. The Orleans deaths were not included in the Sun’s investigation at that time because they involved maintenance employees, not workers involved in the $32 billion building boom under way on the Strip.

The Orleans accident occurred Feb. 2, 2007. While attempting to fix a pipe that was causing a sewage backup, Orleans plumber Richard Luzier fell into a manhole. Engineer Travis Koehler entered to save him. Both lost consciousness.

A third employee, David Snow, went down to save the other two and also became unconscious. Luzier and Koehler died at the scene. Snow recovered after spending several weeks on life support.

Based in part on information from Barker, who at the time was Boyd’s environmental health and safety manager, OSHA found that company officials were warned by their employees and by OSHA itself about the dangers of not having a safety plan for problems that arise with the manholes. The company failed to correct the problem swiftly, OSHA investigator Olaechea determined.

The case has since drawn the attention of federal OSHA, which has oversight responsibility for state OSHA programs. Acting on a complaint from the mother of Koehler and from another person involved in the investigation, the federal OSHA regional office in San Francisco is now investigating the way the state OSHA resolved the Orleans case. Results are expected in the coming weeks.

Frank Strasheim, former regional administrator for the San Francisco office, said that occasionally an OSHA department will bring in higher-ranking officials and work out unusual settlements. That happens if OSHA is concerned that its case is too weak and the company will not fix glaring safety problems while the case goes through a drawn-out review process, he said.

The outcome of this case leaves glaring questions, Strasheim and others said.

Former Gov. Kenny Guinn, a two-term Republican whom Gibbons succeeded, told the Sun: “You would hope that the normal process would take care of all situations. It’s difficult to have individual people involved who are not working there, who are not the inspector and haven’t seen the situation.

“There are pretty good procedures written forth and the inspector puts together recommendations and they should follow that,” Guinn said.

Asked about the case this week, Boyd spokesman Rob Stillwell said higher state officials became involved because they wanted Boyd to agree to the “historic safety program. They wanted to address their relationship with the casino industry.”

Stillwell said company officials never interfered with the investigation. He also said he didn’t believe the company had asked any political appointees to become involved in the case.

Gibbons Press Secretary Ben Keickhefer said the governor was never directly involved, and that his office never put pressure on OSHA. Keickhefer also said there was no direct contact between anyone at Boyd and the governor’s office regarding the case.

Elliott through a spokesperson did not respond to requests for comment.

Bremner, who oversees OSHA and reports to Elliott, said Elliott never put pressure on him or the department to decide the case a certain way.

OSHA’s initial investigation of the Orleans tragedy lasted six weeks. Afterward, inspector Olaechea wrote to his bosses that he believed the case clearly warranted “willful citations,” which means the employer knew about the safety problem and didn’t fix it.

Particularly damaging to Boyd was a series of e-mail, memos and statements from company safety engineer Barker. He told OSHA he knew that confined spaces, such as the sewage pit the employees fell into, were dangerous and that the Orleans and other Boyd properties didn’t have programs for training workers on how to deal with those risky spaces.

Barker’s e-mail showed he had discussed the problem with company officials but they took no prompt action.

Also damaging were several recent OSHA citations against Boyd for identical violations at the company’s California and at Gold Coast properties.

Olaechea wrote his findings on March 13, 2007. “Boyd Corporate had knowledge and failed to act,” Olaechea concluded. “That is the exact definition of a willful (by indifference).”

The burden of proof for willful citations is very high, and such citations are rare in the state.

Olaechea’s supervisors at OSHA, including agency head Czehowski, agreed to proceed with Olachea’s determinations.

But the case proceeded slowly.

At some point, Boyd asked Elliott to become involved, according to Elisabeth Shurtleff, a spokeswoman for Elliott’s department.

In turn, Elliott briefed Cornwall, the governor’s chief operating officer, about the case, Cornwall told the Sun.

In May, Elliott transferred Czehowski out of OSHA to become interim director of the Taxicab Authority. Last month, however, Elliott transferred Czehowski back to OSHA, where he again heads the agency.

The Orleans case was resolved while he was gone.

After his transfer, the Orleans file sat largely idle for months on the desk of Czehowski’s replacement, Steve Coffield, according to a person familiar with the case. Drafts of the report occasionally passed back and forth between him and Olaechea. During that time, OSHA did depose several Boyd officials under oath to shore up extra support for the case under the expectation Boyd would appeal the charges.

Time, meanwhile, began to run out.

By law, OSHA has six months to complete its investigations. After that, any citations issued could be considered invalid.

Elliott’s involvement caused some delay in scheduling a meeting to close the case, Shurtleff said.

Barker, the Boyd safety manager, said in an interview the company was aware that drawing out the process beyond the deadline could weaken OSHA’s clout in the case.

Barker said Boyd officials were fearful of “willful” citations that would make it appear they had negligently created unsafe working conditions for employees, and that the finding could lead to higher fines if they were to be cited again by OSHA.

“There was no question in my mind that this was a willful negligent act,” he said. He accused the company of trying to prevent him from keeping e-mail that could prove damaging against Boyd.

Boyd spokesman Stillwell said the company had no strategy and made no effort to impede the investigation. The company opposed the willful citations because “they didn’t accurately reflect the company’s policy. We go to great lengths to provide a safe work environment for all our workers, and (the willful citations) just weren’t true,” Stillwell said.

Eventually, before the case was resolved, Barker quit the company. He now works for a construction company.

The six-month deadline elapsed Aug. 2. Five days later, a closing conference was held at Elliott’s office in the state building downtown. A Boyd representative had agreed to allow citations to be issued beyond the six months.

Those at the meeting included Olaechea, Boyd representatives, OSHA administrators and Elliott.

Olaechea presented the findings of willful violations. According to a person familiar with the investigation, Boyd representatives disagreed and sought another opportunity to discuss the findings.

Usually at that point, a state investigator issues the citations anyway and instructs the company that it can appeal.

Instead, the talks ended, only to resume at some point soon afterward without Olaechea, who has since left the state and could not be reached for comment.

Involved in the negotiation were Coffield, Elliott and Bremner, whose of Industrial Relations Division oversees OSHA and reports to Elliott.

Bremner told the Sun he made the final decision to overturn the citations.

The “willful” violations were reduced to “serious.” Fines of about $400,00 were cut to $185,000, still among the largest in state history.

But to reach that level, the department had to engage in another odd maneuver.

OSHA law caps fines for a willful violation at $70,000 and for a serious violation, at $7,000 — too low to reach the $185,000 total. So the state once again went outside of normal procedures, attaching $23,000 to each of the eight serious violations, plus other fines.

In the settlement, Boyd agreed to a completely revamp its safety procedures at its properties. OSHA agreed to provide safety training, a service normally reserved for small companies that don’t have the resources of the gaming giant.

But the deal also reduced the reach of OSHA inspectors on all Boyd properties for at least two years. Regular inspections will not be allowed. Only investigations stemming from complaints, referrals or accidents can take place, as is standard when a company is undergoing OSHA consultation and training.

Strasheim, the former federal OSHA official, and others interviewed by the Sun said they are baffled by the circumstances and terms of the Orleans settlement.

Strasheim also said he had never heard of an OSHA department allowing a six-month investigative period to run out, then negotiating a settlement. He also said he did not understand the state’s decision to provide safety training for so large a company.

The family members and victims in the case are determined to understand what happened at OSHA in the course of those six months.

“My grief has turned back into anger,” said Debi Fergen, the mother who filed a complaint to federal officials. “I just didn’t want my son’s case to be swept aside as not important.”

Snow, who spent seven weeks in the hospital, is back working at Sam’s Town, another Boyd property. But he suffers periodic panic attacks. He and his wife Kelly spend spare time searching for a lawyer willing to take on Boyd.

“Finding an attorney willing to go the distance has been the ordeal,” Snow said. “The attorneys are basically telling us that because of worker’s comp law, we can’t do anything.

“They say that if OSHA wouldn’t have changed the wording then we might have a lawsuit, if they had stuck to their guns and cited them” for willfull violations.

Sun reporters Alex Richards and Cy Ryan contributed to this story.