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The CCP and Due Process: U.S. Chamber of Commerce v. U.S. Department of Labor, OSHA Docket No. 98-1036, April 9, 1998

Date: Jun 01, 1999


In 1997, the Occupational Safety and Health Administration (OSHA) decided to "re-focus" its enforcement resources to workplaces which have the "most" problems. Based on its Maine 200 program, OSHA obtained data from employers on their individual site illness and injury rates (IIR), and identified a list of companies that had IIR substantially over the average for their industry or over the national average. These employers were then sent "invitations" to agree to develop a comprehensive safety and health program, or to be included on the primary inspection list for the coming year. Thus, employers faced the Hobson's choice of facing a wall-to-wall inspection or of committing to a comprehensive workplace safety program as modeled on OSHA's 1989 S&H Program Guidelines.

While few would argue that employers need an organized approach to safety and health, few employers agreed with the premise that OSHA's offer was "voluntary." Many reacted as expected, with a reluctance to challenge the agency, but with equal reluctance to agree to comply with what was basically an open-ended commitment to a vague and uncertain standard. Not surprisingly, the U.S. Chamber of Commerce of the United States and other plaintiffs challenged the program, questioning OSHA's authority to adopt it unilaterally.

On April 9, 1999 the United States Court of Appeals for the D.C. Circuit held that OSHA had adopted the program illegally, because it was in essence a standard that needed to be adopted through notice and comment rulemaking, like any other OSHA standard. OSHA improperly characterized the cooperative compliance program (CCP) as a regulation, issuing the CCP as a directive. The Chamber argued that the CCP was a standard as defined by the Occupational Safety and Health Act (OSH Act), and was thus required by it and the Administrative Procedures Act (APA) to follow the procedures required under the APA to adopt a health and safety standard.

OSHA believes that the CCP represents an innovative approach to workplace safety, allowing employers with a high risk for injury and illness to voluntarily comply with a series of requirements set forth by OSHA. By doing so, these employers are removed from OSHA's primary inspection list for high risk sites, reducing the chance for subsequent OSHA inspections by 70 to 90 percent. For those choosing not to participate in the CCP, OSHA virtually guaranteed a comprehensive wall to wall inspection. The requirements of the CCP are such, that to satisfy program requirements an employer would have to exceed levels of workplace safety and health already required by existing standards and the general duty clause.

The court first addressed the jurisdictional issue raised by OSHA, who argued that, because, the CCP was an agency regulation rather then a standard, any challenge to it had to be brought in the District Court. Citing Louisiana Chemical Association v. Bingham, the court squarely addressed the question of whether such a program was an OSHA standard as defined in the statute:

If the basic function of the rule is "to address. . . a specific and already identified hazard, [and it is] not a purely administrative effort designed to uncover violations of the Act," then the rule is a standard. If on the other hand, the rule is "merely a general enforcement or detection procedure," then it is a regulation. In other words, a standard, unlike a regulation, is "aim[ed] toward correction rather than mere inquiry into possible hazards.

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Based on this definition the court concluded that, because the practical effect of the CCP is to oblige employers to comply or be subject to substantial consequences -- a highly aggressive inspection and possible severe penalties -- the program is more properly characterized as a standard. Even though "the Directive fits the definition of a standard only imperfectly," the court said, "it fits the definition of a regulation not at all."

Next, the court addressed the basic issue whether OSHA had to provide the public with notice of the proposed action and an opportunity to comment on it before proceeding to notify employers and begin inspections. OSHA acknowledged that the CCP amounted to a rulemaking, but claimed it was a "procedural" rule. Under the APA rules of agency procedure and general statements of policy are not subject to the notice and comment proceeding, because they do not, it is argued, subject the regulated community to any "substantive" obligations. In supporting its claim, OSHA argued that the CCP was an inspection "plan" that did not reward or condemn employers for acting or failing to act in accordance with the CCP, and that, regardless of the practical impact, the Directive had no substantial impact.

The court rejected OSHA's contention that the rule was simply an inspection plan, and did not put its stamp of approval on any particular kind of behavior. The CCP required employers to do more than simply comply with the requirements of the Act -- OSHA -- clearly up[ped] the substantive ante -- by telling employers who agreed to adopt the programs that they had to follow not only OSHA standards, but also industry voluntary standards, industry practices, and suppliers safety recommendations. Having imposed more than the "incidental inconveniences [of] an enforcement scheme," OSHA intended to affect the safety practices of thousands of employers caught in the web of the "voluntary" program. This, said the court, OSHA could not do with an opportunity for fair notice and hearing, the quintessential elements of due process in our constitutional scheme. We will see if and how OSHA modifies its approach in the upcoming safety and health program rule rulemaking.

The following article appeared in Compliance Magazine (June 1999) and it is reprinted with permission of Compliance Magazine. Copyright © 2001 by IHS Publishing Group. All rights reserved.

For further information about this article, please contact David G. Sarvadi at 202-434-4249 or by e-mail at sarvadi@khlaw.com.