Stoddard Lumber Co., Inc. v. Marshall, 79-4143

• Citation: 627 F.2d 984
• Decision Date: 15 September 1980
• Docket Number: No. 79-4143,79-4143
• Parties: 8 O.S.H. Cas.(BNA) 2055, 1980 O.S.H.D. (CCH) P 24,790 In the Matter of Establishment Inspection of STODDARD LUMBER COMPANY, INC., 1/4 Mile South of City of Yellowstone Highway, St. Anthony, Idaho, Petitioner- Appellant, v. Ray MARSHALL, Secretary of Labor, U.S. Department of Labor, Respondent- Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 984

627 F.2d 984

8 O.S.H. Cas.(BNA) 2055, 1980 O.S.H.D. (CCH) P 24,790

In the Matter of Establishment Inspection of STODDARD LUMBER

COMPANY, INC., 1/4 Mile South of City of

Yellowstone Highway, St. Anthony, Idaho, Petitioner- Appellant, v. Ray MARSHALL, Secretary of Labor, U.S. Department of Labor,

Respondent- Appellee.

No. 79-4143.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 2, 1980.

Decided Sept. 15, 1980.

John L. Runft, Runft & Longeteig, Chartered, Boise, Idaho, on brief, for petitioner-appellant.

Charles Hadden, Carin A. Clauss, Benjamin W. Mintz, Allen H. Feldman and Thomas L. Holzman, Washington, D.C., on brief, for respondent-appellee.

Appeal from the United States District Court for the District of Idaho.

Before SNEED and NELSON, Circuit Judges, and GRAY ^*, District Judge.

SNEED, Circuit Judge:

Appellant, Stoddard Lumber Company, appeals from an order of the district court holding the company in contempt of court for refusing, on November 29, 1978, to honor an Occupational Safety and Health Administration (OSHA) inspection warrant that was obtained ex parte on November 21, 1978. Stoddard challenges the district court's order on three grounds: (1) the district court erred in finding that the Secretary of Labor's inspection selection method was exempt from the notice and comment rulemaking procedures of the Administrative Procedure Act (APA) under 5 U.S.C. § 553; (2) the district court erred in finding that Stoddard fit within the standards outlined in the Secretary's inspection selection plan; and (3) the Secretary lacked the authority to apply ex parte for inspection warrants under 29 C.F.R. § 1903.4. We find no merit in appellant's challenges and affirm the contempt order.

Our jurisdiction rests on 28 U.S.C. §§ 1291 and 1294(1).

I. FACTUAL BACKGROUND

Stoddard Lumber Company is an Idaho corporation engaged in the business of producing lumber and other wood products for shipment to points both inside and outside the State of Idaho, and is thereby subject to the Occupational Safety and Health Act of 1970, 29 U.S.C. §§ 651 et seq., (hereinafter referred to as "the Act"). ¹ Since July 1, 1974, OSHA's Boise Area Office has utilized a detailed procedure for identifying and selecting particular work establishments for inspection pursuant to section 8(a) of the Act. Under OSHA's General Schedule Inspection Selection Process, OSHA inspections are divided into two categories: (1) unscheduled inspections, which are conducted in response to the receipt of information of hazardous working conditions at a particular establishment; and (2) general schedule inspections, which are scheduled on the basis of objective selection criteria. ²

Utilizing this inspection selection procedure, Richard Jackson, OSHA Area Director for the State of Idaho, selected Stoddard for a general schedule inspection, and assigned an OSHA compliance and safety officer to conduct it. However, on September 26, 1978, when compliance officer Garney Coffey attempted to inspect the Stoddard workplace, the company refused him entry. Thereupon, the Secretary of Labor filed an application for an ex parte inspection warrant in the United States District Court for the District of Idaho. Based on the Secretary's warrant application and accompanying documents, the district court found sufficient probable cause to issue a warrant authorizing a full inspection of the Stoddard premises.

On November 29, 1978, an OSHA compliance officer returned to the Stoddard workplace and attempted to execute the warrant, but the company, after consulting with its attorney, again refused to permit the inspection. The Secretary then applied to the district court for an order holding Stoddard in contempt. The district court issued an order directing Stoddard to show cause why it should not be held in contempt. After a hearing held on the show cause order, the court entered an order holding the company in contempt for its refusal to honor the OSHA inspection warrant. The court fined Stoddard $500 plus an additional $100 for each succeeding refusal to permit an inspection. ³

Stoddard contends that the warrant was invalid because it was issued pursuant to an OSHA regulation which was not promulgated in accordance with the APA notice and comment rulemaking procedures under 5 U.S.C. § 553. Alternatively, appellant argues that the warrant was invalid because it lacked an adequate showing of probable cause, and because it had been obtained ex parte.

II. RULEMAKING PROCEDURES UNDER THE APA

The Act evidences a strong congressional policy that every worker in the United States should be afforded a safe working environment. 29 U.S.C. § 651(b). To that end, the Secretary of Labor is invested with limited authority to enter and inspect workplaces for occupational hazard "during regular working hours and at reasonable times . . . within reasonable limits and in a reasonable manner . . . ." 29 U.S.C. § 657(a)(2). The Secretary is also given authority to "prescribe such rules and regulations as he may deem necessary to carry out (his) responsibilities under this chapter, including rules and regulations dealing with the inspection of an employer's establishment." 29 U.S.C. § 657(g)(2).

Stoddard contends that the Secretary's General Schedule Inspection Selection Process is per se unreasonable because it is a "rule" ⁴ that has not been promulgated in accordance with the formal rulemaking procedures of 5 U.S.C. § 553. Section 553 requires publication of an agency's rules in the Federal Register at least thirty days before its effective date, and that persons subject to an agency's rules be given notice of and an opportunity to comment on proposed rules. However, by its own terms, the notice and comment requirements of 5 U.S.C. § 553 do not apply "to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice . . . ." 5 U.S.C. § 553(b)(3)(A).

Distinguishing between those types of rules which to be valid must be promulgated pursuant to the procedures of section 553 and others whose validity does not rest on observance of that section's notice and comment procedures has proved to be quite difficult. A few quite simple and universally accepted propositions can be stated, however. Legislative rules must be promulgated pursuant to section 553. Interpretative rules and other types of declarations described in section 553(b)(3)(A) frequently, but not invariably, need not be. The fundamental distinction between legislative rules and interpretative rules has been described by Professor Davis in the following manner:

"A legislative rule is the product of an exercise of delegated legislative power to make law through rules. An interpretative rule is any rule an agency issues without exercising delegated legislative power to make law through rules."

2 K. C. Davis, Administrative Law Treatise, § 7:8 (2d ed. 1979) (hereinafter cited as Davis ). Valid and properly promulgated legislative rules have the force of law; interpretative rules are subject to having their content rejected by a court. Even though an agency has the power to promulgate legislative rules, as the Secretary does in this case, it might choose not to issue rules pursuant to that authority. In such instances the rules are interpretative, not legislative. Id.

The preciseness of these propositions is greatly reduced by the fact that many courts have held that rules, even though intended by the agency to be interpretative, which have a "substantial impact" must nonetheless comply with the notice and comment procedure. See National Motor Freight Traffic Ass'n v. United States, 268 F.Supp. 90 (D.D.C. 1967), aff'd 393 U.S. 18, 89 S.Ct. 49, 21 L.Ed.2d 19 (1968); Pharmaceutical Manufacturers Ass'n v. Finch, 307 F.Supp. 858 (D.Del. 1970); Davis, § 7:17. The presence of "substantial impact" is indicated, it has been said, by "the amount of confusion and controversy generated and the need for expertise in resolving the issue, in addition to its financial impact on affected parties." See Warren, The Notice Requirement In Administrative Rulemaking: An Analysis Of Legislative And Interpretive Rules, 29 Adm.L.Rev. 367, 389 (1977). Courts applying the "substantial impact" analysis sometimes ignore the APA distinction between legislative and interpretative rules and simply distinguish between rules having a "substantial impact" which are subject to the notice and comment procedure and those not having such an impact which are not subject to such procedure. Professor Davis, while taking care to point out the juridical difference between legislative rules and interpretative rules, expresses approval of the exercise by the courts in appropriate cases of the power to require notice and comment procedures even though not specifically required to do so by the APA. Davis, § 7:18. In his view the Supreme Court's recent adjuration to avoid imposing procedural requirements beyond those of section 553, set forth in Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519, 524, 98 S.Ct. 1197, 1202, 55 L.Ed.2d 460 (1978), should not terminate this practice. Davis, § 7:19.

Be that as it may, we have no difficulty in holding that neither the General Schedule Inspection Selection Process, nor OSHA Instruction CPL 2.25, nor the 1979 OSHA Field Operations Manual and Industrial Hygiene Field Operations Manual Chap. IV, each of which is referred to by appellant in his brief, is subject to notice and comment procedure. None was promulgated as a legislative rule by the Secretary. Also none has a sufficiently "substantial impact" to justify such procedure. The program by which the choice of installations to inspect is made remains subject to control by the courts exercising their responsibilities under the criteria of the Fourth Amendment as explicated in Marshall v. Barlow's, Inc., 436 U.S. 307, 98 S.Ct. 1816, 56 L.Ed.2d 305 (1978). ...