Brennan v. Occupational Safety & Health Review Com'n

Decision Date26 October 1973
Docket NumberNo. 73-1029.,73-1029.
Citation487 F.2d 438
PartiesPeter J. BRENNAN, Secretary of Labor, Petitioner, v. OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION and Interstate Glass Co., Respondents.
CourtU.S. Court of Appeals — Eighth Circuit

Harlington Wood, Jr., Asst. Atty. Gen., and Walter H. Fleischer, and Jean A. Staudt, Attys., Dept. of Justice, Washington, D.C., for petitioner.

William J. Koenigsdorf, Kansas City, Mo., for respondent, Interstate Glass Co.

Before HEANEY, STEPHENSON and WEBSTER, Circuit Judges.

WEBSTER, Circuit Judge.

In this petition the Secretary of Labor seeks judicial review of an order of the Occupational Safety and Health Review Commission in which the Commission, while upholding the Secretary's citations for violations of the Act, nonetheless vacated the proposed penalties for such citations. We affirm the order of the Commission.

The Occupational Safety and Health Act of 1970, now popularly known as "OSHA", is of recent origin and will have substantial impact upon American Industry. The Secretary of Labor is charged with its enforcement, and in this action he seeks to limit the power of the Commission to modify penalties proposed by him which are within lawful limits. Because this appears to be a case of first impression, and one which tests in part the respective roles of the Secretary and the Commission, some initial explication of OSHA is appropriate.

"OSHA"

The Act was adopted in 1970 and became effective on April 28, 1971. The bill as passed is a compromise between two competing bills that were submitted both to the House and to the Senate. One bill was administration-backed and the other was strongly supported by organized labor. Although the difference in the two bills primarily involved whether both rule-making and enforcement powers should be located in the same agency, it is clear that both sides favored a bill which would establish a comprehensive program that would substantially reduce the large number of job-related deaths, injuries and health hazards which have existed.1 It is estimated that 4.1 million businesses and 57 million employees are affected.2

The Act provides for the development of a "laundry-list" of violations. Companies are subject to periodic compliance inspections which are carried out at random either upon complaint or upon the inspector's own initiative.3 Advance notice of an inspection is prohibited, and violators of this provision are subject to criminal sanctions.4 Violations may be either of standards promulgated by the Secretary5 or of the "general duty" provision,6 a catch-all provision intended to supplement the standards formulated by the Secretary.

A violation is "serious" if there is a possibility of an accident and a substantial probability that death or serious physical injury would result.7 Under the Act, a penalty may be imposed of up to $1,000 for a non-serious violation.8 Upon receiving notice from the Secretary of the citations and proposed penalties, the employer has 15 days to contest either the citation or the proposed penalty or both9 by notifying the Secretary who transmits the information to the Commission. The Commission is an independent adjudicatory agency established under the Act, 29 U.S.C. § 661. The Commission is authorized to conduct hearings under § 659(c), which hearings are conducted under § 5 of the Administrative Procedure Act, 5 U.S.C. § 554.10

The Commission's hearing is presided over by a single Commission Judge who writes an opinion which is then subject to review by the entire three-man Commission at its discretion. After 30 days, if no other member requests a review, his order becomes final and the order of the Commission.

FACTS

On March 28, 1972, a compliance officer of the United States Department of Labor conducted a compliance investigation of respondent Interstate Glass Company, Lincoln, Nebraska. As a result of conditions uncovered during this investigation, Interstate was cited by the Secretary of Labor on March 29, 1972, for seven "non-serious" violations.11 The fines totalled $375.00. The Company was ordered to abate item #3 immediately and was given until April 7, 1972, to abate the remaining six. Thereafter, the Secretary withdrew items 6 and 7 and the penalty was reduced to $225.

On April 13, 1972, respondent advised the Secretary that all five remaining violations were abated and that it wished to contest the citations and proposed penalties. This notice of contest was properly transmitted to the Secretary, who thereupon transmitted it to the Commission. The Secretary then submitted to the Commission a complaint under 29 CFR § 2200.7(d) setting forth the substance and penalties of the five violations. The respondent company answered, admitting a violation as to items 3 and 4 but denying the remaining allegations (items 1, 2, 5).

The Commission Judge, after hearing, determined that all five proposed violations did exist as set forth in the citation and were supported by the evidence. However, he vacated all five proposed penalties on the grounds that employees had never complained of the conditions, the employer was either unaware that the conditions were violations or had no knowledge of them, and the employer exercised diligence and good faith in abating the hazards immediately after the citation. Consequently, he concluded, "it will serve no useful purpose of the Act to levy these small fines under the total circumstances involved in this case." It is the vacation of the proposed penalties from which the Secretary appeals.12

I

SCOPE OF ADMINISTRATIVE REVIEW

The Commission is granted the power to review either the citation or the proposed penalty or both under 29 U.S.C. § 659(a) and (c). The scope of such review is set forth in § 659(c):

"The Commission shall thereafter after hearing issue an order, based on findings of fact, affirming, modifying, or vacating the Secretary\'s citation or proposed penalty or directing other appropriate relief, and such order shall become final thirty days after its issuance." (emphasis added)

Some writers have interpreted this section of the Act as granting the Commission final authority to affirm, modify, or vacate penalties.13 The Commission has acted upon a similar view of its power. "As of May 16, 1972, penalties proposed by the Department of Labor had been modified in 58 percent of the cases appealed to the Review Commission. In 43 percent of the cases, the penalty was reduced; in 15 percent, it was increased."14 In other instances the Commission has vacated the penalties but not the violations.15

It is the position of the Secretary-Petitioner that by vacating all five proposed penalties, the Commission abused its discretion and frustrated the purposes of the Act. This assertion is based on a well-reasoned argument that such action frustrates the purpose of OSHA, which relies primarily on voluntary compliance, by nullifying the employer's incentive in self-policing and self-enforcement. Notwithstanding the validity of this argument, the threshold question is whether the review by the Commission is de novo.

Prior to the Commission's review, the Secretary had already taken the "circumstances" into consideration in setting the proposed penalties. As each violation was categorized as "non-serious", a fine not exceeding $1,000.00 was authorized, although not required, for each violation. 29 U.S.C. § 666(c). After placing each violation in a particular category depending upon its gravity, the Secretary reduced the five unadjusted penalties (1) 20% for the good faith of employer, (2) 10% for having less than 20 employees and (3) 20% for having no history of past violations. The adjusted penalties were further reduced 50% because all violations were abated within the period specified. This method of calculating proposed penalties is the standard procedure prescribed by the Secretary's published Compliance Operations Manual. It must be assumed that the Secretary's complaint is the Commission's failure to uphold his procedures for imposing penalties when the Commission affirms the Secretary's findings of violations. Obviously, the Secretary does not want his imposed penalties continually contested with the hope or expectation of the employer that the Commission will reduce or vacate them.

The Secretary's argument, however, ignores the clear statutory language. His imposition of penalty is denominated a "proposed penalty". 29 U.S.C. § 659(a). This proposed penalty becomes final only if the employer accepts it or does not "contest" it, in which case it becomes a final order not subject to review by any court or agency. 29 U.S.C. § 659(a). If, on the other hand, the employer contests the order and proposed penalty, the Commission acts de novo.16 Moreover, 29 U.S.C. § 666(i) provides as follows:

"The Commission shall have authority to assess all civil penalties provided in this section, giving due consideration to the appropriateness of the penalty with respect to the size of the business of the employer being charged, the gravity of the violation, the good faith of the employer, and the history of previous violations."

The Congressional intent is thus plainly manifested that the Commission shall be the final arbiter of penalties if the Secretary's proposals are contested and that, in such a case, the Secretary's proposals merely become advisory. We find no authority to the contrary. In one recent Fifth Circuit opinion, the court vacated an order of the Commission setting aside proposed penalties and reinstated the Secretary's proposed penalties. Brennan v. Occupational Safety and Health Review Commission and Brent Towing Co., Inc., 481 F.2d 619 (5th Cir.1973). The question presented there was whether a particular letter constituted a "notice of contest". The Commission determined that it did and vacated the proposed penalties because the Secretary had not forwarded the letter within the required time...

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