Commissioner of Labor v. Gary Steel Products Corp.

• Decision Date: 30 November 1994
• Docket Number: No. 49A02-9309-CV-474,49A02-9309-CV-474
• Citation: 643 N.E.2d 407
• Court: Indiana Appellate Court
• Parties: COMMISSIONER OF LABOR and the Board of Safety Review, Appellants-Respondents, v. GARY STEEL PRODUCTS CORPORATION, Appellee-Petitioner.

Page 407

643 N.E.2d 407

COMMISSIONER OF LABOR and the Board of Safety Review, Appellants-Respondents, v. GARY STEEL PRODUCTS CORPORATION, Appellee-Petitioner.

No. 49A02-9309-CV-474.

Court of Appeals of Indiana,

Second District.

Nov. 30, 1994.

Pamela Carter, Atty. Gen., Richard E. Shevitz, Deputy Atty. Gen., Office of Atty. Gen., Indianapolis, for appellants.

Douglas J. Heckler, Barnes & Thornburg, Indianapolis, for appellee.

OPINION

HOFFMAN, Judge.

Appellants-respondents, the Commissioner of Labor (Commissioner) and the Board of Safety Review (Review Board) (collectively "IOSHA"), appeal from a judgment reversing their Final Order and decision finding appellee-petitioner Gary Steel Products Corporation (Gary Steel) to have committed a series of safety violations. The facts pertinent to this appeal are summarized below.

Gary Steel is a manufacturer of furnace ductwork with its plant located in Gary, Indiana. The company has three main manufacturing lines. The flex duct manufacturing line, made up of approximately eight employees, is located in the basement of the plant. In early October 1989, insulation material from pipes hanging from the ceiling began to break off and accumulate on the basement floor, equipment, and product.

In mid-September 1989, Theodore Primich, Gary Steel's president, arranged to have a local construction excavator, Percell McQueen, remove the insulation. At the time, the issue of whether the insulation material might contain asbestos was discussed. The work performed the weekend of October 1, 1989, proved to be unsatisfactory. Although most of the insulation had been removed before the flex duct production employees (production employees) arrived at work on Monday, October 2, 1989, the basement was littered with a thick layer of insulation debris on the floor, equipment, and product. When the production employees refused to work in the basement, Gary Steel recruited several of its maintenance employees to clean up the mess.

Cleanup began on October 2, 1989, and ended on October 3, 1989. The maintenance employees used brooms, a sweeping compound called "floor sweep," heavy duty white garbage bags, gloves and dust masks, on an optional basis, to clean the basement. At the end of the day, between thirty and fifty bags containing the insulation material were filled. Before the maintenance employees went home, Gary Steel gave them new work clothes and ordered them to throw their old work clothes away.

The next day, Tyvac suits were provided to the employees and cleanup occurred in a similar manner as the day before. By the time they completed their work, ten additional bags of debris had been filled. Although cleanup was completed, additional dust and debris remained, so the production employees continued in their refusal to return to work.

On October 4, 1989, a licensed asbestos abatement contractor was hired by Gary Steel to inspect the plant and to finish removing the insulation. The contractor informed Primich that the insulation should have not been removed but instead sealed. While the contractor was working to remove the remaining asbestos the following weekend, the Commissioner of Labor, by Compliance Officer Wayne Glotfelty, inspected the plant. After the insulation was completely removed and in the presence of Glotfelty, the asbestos contractor conducted an air sample and bulk sample test which confirmed the existence of asbestos in the insulation.

Later, the debris was transferred from the white garbage bags supplied by Gary Steel, into proper six-millimeter, impermeable plastic bags normally used for asbestos removal. During a subsequent closing conference, discussions occurred between Gary Steel and Glotfelty regarding Gary Steel's use of respirators. Gary Steel provided Glotfelty with a copy of the company's written instructions on respirator use.

In December 1989, the Commissioner of Labor issued a safety order and notice of penalty charging Gary Steel with a series of serious violations and recommended a fine of $21,000.00. In April 1990, nine of the violations were upgraded in classification from "serious" to "knowing" pursuant to IND.CODE § 22-8-1.1-27.1 (1988 Ed.).

In December 1990, the case was heard by an Administrative Law Judge (ALJ), who prepared recommended findings of fact and conclusions of law. Applying 29 C.F.R. § 1926.58, et seq. in conjunction with IND.CODE § 22-8-1.1-27.1, the ALJ found Gary Steel had knowingly committed eight of nine ¹ alleged safety violations. Consequently, he recommended the Review Board impose penalties of $10,000.00 per each violation, for a fine totalling $80,000.00. On May 28, 1992, the Review Board adopted the ALJ's findings as its own and entered a Final Order.

Gary Steel sought judicial review of the Final Order in June 1992. After reviewing the evidence, the trial court reversed the Final Order in its entirety. This appeal ensued.

On appeal, IOSHA raises two issues which we consolidate into one: whether the trial court properly reversed each of the eight violations found to exist by IOSHA.

The trial court reversed the Final Order finding, inter alia, IOSHA misconstrued IND.CODE § 22-8-1.1-27.1, Gary Steel's due process rights were violated by IOSHA's actions, IOSHA engaged in administrative rulemaking without resorting to proper procedure, Gary Steel was cited under the wrong standard, and as to the last violation, IOSHA's finding was unsupported by facts in the record.

First, IOSHA claims the trial court improperly found error in its decision to redefine the term "knowing," ² for purposes of IND.CODE § 22-2-8-1.1-27.1(a). In reviewing a decision of an administrative agency, neither the trial court nor this Court on appeal may substitute its own judgment or opinion in place of the agency's in those matters within the scope of the agency's discretion and authority. Clarkson v. Department of Ins., etc. (1981), Ind.App., 425 N.E.2d 203, 207. Further, an administrative agency's reasonable interpretation of a silent or ambiguous statute, which it is charged with enforcing, will be allotted considerable deference. Indiana DNR v. Krantz Bros. Const. (1991), Ind.App., 581 N.E.2d 935, 939. Only if an agency misconstrues the statute may the trial court reverse the agency's action as being arbitrary and capricious. Peabody Coal Co. v. Dept. of Nat. Resources (1992), Ind.App., 606 N.E.2d 1306, 1308.

It is without dispute that IOSHA is charged with applying IND.CODE § 22-8-1.1-27.1. Likewise, neither party disputes the trial court's finding that the Occupational Safety and Health Act's ("OSHA") use of the term "willful" under 29 U.S.C. § 666 is synonymous with Indiana's use of the term "knowing" under IND.CODE § 22-8-1.1-27.1. Thus, we need only review whether this revised definition is a reasonable one.

Prior to this dispute, IOSHA defined the above term by following the Third Circuit's holding in Frank Irey, Jr. v. Occupational Safety and Health Review Commission (3rd Cir.1974), 519 F.2d 1200. Frank Irey interpreted "willful" under 29 U.S.C. § 666 as meaning "intentional disregard" or "plain indifference" to the requirements of OSHA. Id. at 1207. However, the Frank Irey court also injected a bad motive requirement into the word "willful" by reasoning that "intentional disregard" differs little from an "obstinate refusal to comply" or "flaunting of the Act." Id.

Upon further review of the relevant federal case law and the language of IND.CODE § 22-8-1.1-27.1 as it applied to the present dispute, IOSHA determined that requiring the word "knowing" to include a bad motive, was unwarranted. Instead, guided by National Steel and Ship Building Company v. OSHRC (9th Cir.1979), 607 F.2d 311, reflecting the majority view, ³ IOSHA decided to redefine the term. National Steel adopted the majority's interpretation of "willful" under 29 U.S.C. § 666 as including those acts "involving voluntary action, done either with an intentional disregard of, or plain indifference to, the requirements of the statute." National Steel, 607 F.2d at 314 (quoting Georgia Electric Co. v. Marshall (5th Cir.1979), 595 F.2d 309, 319). However, in rejecting the "bad motive" requirement of Frank Irey, National Steel reasoned that the above definition better serves the congressional intent behind OSHA, i.e., to promote safety in working conditions, and that Frank Irey's approach places too great a burden on the Secretary of Labor to find violations. Id.

IND.CODE § 22-8-1.1-27.1 ⁴ provides, in pertinent part, as follows:

"(a) The commissioner may assess the following civil penalties:

* * * * * *

(2) Any employer who has received a safety order for a serious violation of any standard, rule, or order or this chapter may be assessed a civil penalty of up to one thousand dollars ($1,000) for each such violation.

* * * * * *

(4) Any employer who knowingly or repeatedly violates any standard, rule, or order or this chapter may be assessed a civil penalty of up to ten thousand dollars ($10,000).

(b) For purposes of this section, a serious violation exists in a place of employment if there is a substantial probability that death or serious physical harm could result from a condition which exists, or from one (1) or more practices, means, methods, operations, or processes which have been adopted or are in use, in the place of employment, unless the employer did not know and could not, with the exercise of reasonable diligence, have known of the presence of the violation."

(Emphasis added.)

Here, the trial court found a heightened motive, i.e., a "bad motive" is necessary to the interpretation of the above statute due to the tenfold difference in penalties between "serious" and "knowing" violations. However, the plain language of the statute itself does not offer support for this statutory construction. Further, as the Fifth Circuit Court of Appeals explained persuasively in Georgia Electric Co. v. Marshall (5th Cir.1979), 595 F.2d 309:

"A 'bad purpose'...