U.S. Dept. of Labor v. Kast Metals Corp.

Decision Date29 October 1984
Docket NumberNo. 83-4311,83-4311
Citation744 F.2d 1145
Parties12 O.S.H. Cas.(BNA) 1045, 1984-1985 O.S.H.D. ( 27,093 UNITED STATES DEPARTMENT OF LABOR, Plaintiff-Appellant, v. KAST METALS CORPORATION, Defendant-Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

Francis X. Lilly, Deputy Sol. of Labor, Frank A. White, Assoc. Sol., Dennis K. Kade, Domenique Kirchner, Atty., U.S Jones, Day, Reavis & Pogue, John E. McFall, Marc W. Barta, Dallas, Tex., for defendant-appellee.

Dept. of Labor, Washington, D.C., for plaintiff-appellant.

Appeal from the United States District Court for the Western District of Louisiana.

Before GOLDBERG, RUBIN and REAVLEY, Circuit Judges.

GOLDBERG, Circuit Judge:

We are faced with the question whether the Occupational Safety and Health Administration ("OSHA") validly concocted a calculus to target employers for inspection without first providing the notice and comment rulemaking prescribed by the Administrative Procedure Act ("APA" or "Act"), 5 U.S.C. Sec. 553 (1982). Because we conclude that the Secretary of Labor promulgated a procedural rule that does not generate a substantial impact on the rights or interests of regulated parties, we hold that the Secretary's action did not run afoul of Sec. 553 and reverse the judgment of the district court below.


On December 1, 1982, defendant-appellant United States Department of Labor applied for and obtained a search warrant authorizing a programmed safety and health inspection of a steel castings manufacturing facility in Shreveport, Louisiana. That plant is owned and operated by plaintiff-appellee Kast Metals Corporation ("Kast"), which employs some 1000-2500 workers. The warrant application stated that Kast had been selected for inspection pursuant to a revised administrative plan, OSHA Instruction CPL 2.25B. A federal magistrate found probable cause and issued the warrant, but the company refused to honor its terms. When OSHA agents attempted to conduct the inspection on December 1-3, 1981, Kast allowed access only to the company's records and denied entry to conduct a physical examination of the workplace.

At the time of the OSHA-Kast conflict, CPL 2.25B set forth the criteria and method by which OSHA selected employers for routine safety and health inspections. The plan's stated objective was to concentrate inspection resources "in industries with the highest lost workday injury rates (safety) and with the greatest potential for health problems." CPL 2.25B(E)(4)(c), at 3. This method changed a previous policy of "wide dispersion of inspection activity," id., in an attempt both to reduce the subjectivity of OSHA's selection process and to allocate agency inspection resources more efficiently. After feeding the relevant data into its recipe, 1 OSHA found appellee to be first on On December 8, Kast moved in federal district court to quash the warrant, contending that OSHA had promulgated CPL 2.25B without satisfying the notice and comment rulemaking procedures required by the APA, 5 U.S.C. Sec. 553. The Secretary answered Kast's motion and counterclaimed for an adjudication holding Kast in contempt for having failed to comply with the warrant. In response to Kast's contention that notice and an opportunity for comment should have been provided, the Secretary maintained that CPL 2.25B was within the exemption for "rules of agency organization, procedure, or practice" contained in section 553(b)(A), and that the action did not have a substantial impact on the rights or interests of Kast. In turn, Kast retorted that CPL 2.25B fell outside the exemption because the inspection plan constituted a legislative rule and because, even if not legislative by the terms of section 551(4), the OSHA scheme was a procedural rule that had substantial impact on employers because it affected the likelihood of their being inspected.

the list of employers requiring health inspections but not within the group of companies to be scheduled for a safety check.

The district court concluded that CPL 2.25B had been promulgated in violation of the notice and comment requirements embodied in section 553. Citing this court's decisions in Brown Express, Inc. v. United States, 607 F.2d 695, 701-02 (5th Cir.1979), and Donovan v. Huffines Steel Co., 645 F.2d 288 (5th Cir.1981), aff'g mem. 488 F.Supp. 995 (N.D.Tex.1979), the judge below held that the exemption from notice and comment requirements for procedural rules did not extend to CPL 2.25B because it departed from existing practice and had a substantial impact on those regulated. In essence, the ruling found substantial impact in the fact that CPL 2.25B determined whether and at what time an employer would be inspected.

The district court's disposition subsumes two conclusions; first, that OSHA's investigative plan constituted a procedural rule within the meaning of 5 U.S.C. Sec. 551(4), and second, that the exemption from APA notice and comment requirements generally applicable to procedural rules was overridden by the plan's substantial impact on the regulated parties. We agree only with the former proposition. 2

A. Whether CPL 2.25B Was a Rule 3

With certain exceptions, the APA directs that administrative agencies afford notice of a proposed rulemaking and an opportunity for public comment prior to the rule's promulgation, amendment, or modification. 5 U.S.C. Sec. 553. We begin by evaluating appellant's first claim, that the inspection plan does not fit within the Act's definition of a "rule." See id. Sec. 551(4).

Before doing so, we note that this Court is not bound by an administrative agency's classification of its own action. CBS, Inc. v. United States, 316 U.S. 407, 62 S.Ct. 1194, 86 L.Ed. 1563 (1942); Avoyelles Sportsmen's League, Inc. v. Marsh, 715 F.2d 897, 908 (5th Cir.1983); Brown Express, 607 F.2d at 700; Lewis-Mota v. Secretary of Labor, 469 F.2d 478, 481-82 (2d Cir.1972); Texaco, Inc. v. Federal Power Commission, 412 F.2d 740, 743-45 (3d Cir.1969). The reason for this standard is clear. Although the courts must recognize broad administrative discretion whether to implement procedures above the minima required by Congress, Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519, 544-49, 98 S.Ct. 1197, 1211-14, 55 L.Ed.2d 460 (1978), an agency cannot outflank either the strictures of its enabling legislation or the APA's rulemaking framework by definitional fiat. See International Brotherhood of Teamsters v. Daniel, 439 U.S. 551, 566 n. 20, 99 S.Ct. 790, 800 n. 20, 58 L.Ed.2d 808 (1979); Zuber v. Allen, 396 U.S. 168, 193, 90 S.Ct. 314, 328, 24 L.Ed.2d 345 (1969); NLRB v. Brown, 380 U.S. 278, 291, 85 S.Ct. 980, 988, 13 L.Ed.2d 839 (1965). A paisley ribbon will not make up for damaged goods; the substance, not the label, is determinative. See Western Coal Traffic League v. United States, 694 F.2d 378, 392 & n. 61 (5th Cir.1982), vacated in part en banc, 719 F.2d 772 (5th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 2160, 80 L.Ed.2d 545 (1984); American Trucking Associations, Inc. v. ICC, 659 F.2d 452, 462-64 (5th Cir.1981), cert. denied, 460 U.S. 1022, 103 S.Ct. 1272, 75 L.Ed.2d 493 (1983); Chamber of Commerce v. OSHA, 636 F.2d 464, 468 (D.C.Cir.1980); Energy Consumers & Producers Association, Inc. v. Department of Energy, 632 F.2d 129, 142 (Temp.Emer.Ct.App.), cert. denied, 449 U.S. 832, 101 S.Ct. 102, 66 L.Ed.2d 38 (1980).

The nomenclature of administrative action has its genesis in the APA. The Act states that " 'rule' means the whole or part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the ... procedure of an agency ...." 5 U.S.C. Sec. 551(4). The OSHA inspection plan falls squarely within these terms; CPL 2.25B sets forth a procedure for selecting employers for safety and health inspections pursuant to the Occupational Safety and Health Act of 1970 ("OSH Act"), 29 U.S.C. Sec. 657 (1982).

Nevertheless, averring to the distinction between rulemaking and investigation, 4 the Secretary urges that because the inspection plan does not require any action on the part of those regulated, the plan is more in the nature of a preliminary investigation than it is a prescriptive statement. The Secretary These categories are not mutually exclusive, however. In many cases, information-gathering can be the result of a rule, see, e.g., Donovan v. Wollaston Alloys, Inc., 695 F.2d 1, 9 (1st Cir.1982), and preliminary investigative activity can mold conduct in clearly identifiable ways, see, e.g., Guardian Federal Savings & Loan Association v. Federal Savings & Loan Insurance Corp., 589 F.2d 658, 664-68 (D.C.Cir.1978). To state that a line exists between investigative activity that anticipates the promulgation of a rule (or the initiation of enforcement proceedings) and the rule itself demarcates only a vague result--it does not illumine the content of the distinction.

asserts that investigative action merely facilitates an agency's gathering of information, while a rule has a more immediate or direct effect on those regulated because it requires or prohibits conduct.

That distinction is marked by a particular action's niche along a spectrum of administrative activity. The characterization of agency action as investigative or rule-based is not a function of impact on those potentially subject to the agency's mandate; 5 instead, we must look to the intrinsic nature of the action in terms of the way an agency does business. Cf. Joseph v. United States Civil Service Commission, 554 F.2d 1140, 1153 n. 24 (D.C.Cir.1977) ("The relevant distinction between ... rules is not the nature of the questions they address but the authority and intent with which they are issued and the resulting effect on the power of a court to depart from ... the rule.")

We do not see how CPL 2.25B could constitute an investigative action to the exclusion of its status as a...

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