D.C. Circuit Vacates OSHA Directive

Administrative Law Practice Group Newsletter - Volume 3, Issue 2, Summer 1999

August 1, 1999

Daniel E. Frank

In an important victory for several industry groups, the United States Court of Appeals for the District of Columbia Circuit recently vacated the Occupational Safety and Health Administration's (OSHA) directive imposing a comprehensive—and costly—safety and health program on the manufacturing, transportation and other industries. Chamber of Commerce v. U.S. Department of Labor, 174 F.3d 206 (D.C. Cir. Apr. 9, 1999). The court held that OSHA's issuance of its "Directive" failed to comply with the notice-and-comment requirements of the Administrative Procedure Act (APA). The court's decision is a welcome development in the effort to rein in agencies that seek to evade the public review and comment required by the APA for new agency rules.

Background. Under OSHA's Directive, each employer in selected industries would be inspected unless it adopted an OSHA-approved comprehensive safety and health program. A workplace that participated in the "Cooperative Compliance Program" (CCP) would avoid a comprehensive, and burdensome, inspection by OSHA. Participation in the CCP would require the employer to satisfy a number of requirements, including complying with the standards established in OSHA's 1989 Safety and Health Program Management Guidelines and with various other standards and practices not mandated by law. The U.S. Chamber of Commerce, along with the National Association of Manufacturers, the American Trucking Associations, Inc., and the Food Marketing Institute, sought review of the Directive on the grounds that, procedurally, it failed to comply with the APA's notice-and-comment requirements and that, substantively, it would violate the Fourth Amendment. 174 F.3d at 208-09.

Jurisdiction. The court first held that the Directive was a "standard" issued by OSHA over which the court had appellate jurisdiction, rather than a "regulation," review of which must be sought first in district court. The court reasoned that, although the "proper characterization" of the Directive was "not without difficulty" (174 F.3d at 209), the Directive was more like a standard (rather than a procedural regulation) because it was "the practical equivalent of a rule that obliges an employer to comply or to suffer the consequences." Id. 210. The court rejected OSHA's argument that compliance is "strictly voluntary"; the court reasoned that "the voluntary form of the rule is but a veil for the threat it obscures"—mandatory, burdensome inspection. Id. at 209-10. Because the Directive effectively "imposes upon employers new safety standards more demanding that those required" by the governing statute or existing regulations, it was a standard properly reviewable by the court. Id. at 211. Judge Silberman dissented on the jurisdictional issue because, in his view, the Directive was not directed at a "particular hazard," which he believed "governing precedent" requires for a regulation to constitute a "standard" directly reviewable in the court of appeals. Id. at 213. The majority reasoned that the substantive requirements of the Directive, rather than the particularity of the hazards addressed by it, were dispositive of the issue. Id. at 210.

Notice and Comment. On the merits,1 the court rejected OSHA's arguments that the Directive fell within the exceptions to the notice-and-comment requirements of the APA to which the Directive is subject. As to OSHA's first argument—that the Directive was merely a procedural rule not affecting the substantive rights of any parties—the court concluded that, because the Directive would have a "substantial impact" upon all employers within the Directive's purview, it was a substantive, rather than procedural, rule. 174 F.3d at 211-12. The court again rejected OSHA's argument that compliance was "voluntary"; the Directive would "affect employers' interests in the same way that a plainly substantive rule mandating a comprehensive safety program would affect their rights." Id. at 212. Accordingly, the Directive was not a mere procedural rule exempt from public notice-and-comment requirements.

The court also rejected OSHA's argument that the Directive was a general statement of policy for which notice-and-comment was not required. The court held that the effect of the Directive was not to announce OSHA's "tentative intentions" but, rather, "inform employers of a decision already made," i.e., that employers not participating in the CCP would be inspected. 174 F.3d at 212-13. In addition, the Directive left no discretion to OSHA inspectors in the decision to inspect; thus, the Directive was not a non-binding, general statement of policy under which agency decision makers could exercise their informed discretion. Id.

Conclusion. Because OSHA's Directive failed to comply with the APA's notice-and-comment requirements, the court vacated the Directive. OSHA remains free to repromulgate the Directive, but only if it observes the required procedures and subjects the rule to public review.

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   1. Judge Silberman would have agreed with the majority on the merits. 174 F.3d at 213.]

Daniel E. Frank is an attorney in the Energy & Commodities Practice Group of Sutherland Asbill & Brennan LLP, in Washington, D.C.