Agricultural Retailers Ass'n v. United States Department of Labor

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Submitted May 16, 2016 Decided September 23, 2016

No. 15-1326

AGRICULTURAL RETAILERS ASSOCIATION AND THE
FERTILIZER INSTITUTE,
PETITIONERS

v.

UNITED STATES DEPARTMENT OF LABOR AND OCCUPATIONAL
SAFETY & HEALTH ADMINISTRATION,
RESPONDENTS

Consolidated with 15-1340

On Petitions for Review of a Memorandum
of the Occupational Safety & Health Administration

Gary H. Baise, Stewart D. Fried, Chris S. Leason, Mark
C. Dangerfield, and Andrew E. Dudley were on the joint
briefs for petitioners. Anson M. Keller Sr. entered an
appearance.

Ann S. Rosenthal, Associate Solicitor, Occupational
Safety & Health Administration, Charles F. James, Counsel,
U.S. Department of Labor, and Lauren S. Goodman, Senior
 2
Attorney, U.S. Department of Labor, were on the brief for
respondents.

Randy S. Rabinowitz was on the brief for movant-
intervenor for respondents.

Before: ROGERS, SRINIVASAN and MILLETT, Circuit
Judges.

Opinion for the Court filed by Circuit Judge SRINIVASAN.

SRINIVASAN, Circuit Judge: The Occupational Safety
and Health Administration, part of the Department of Labor,
aims to secure “safe and healthful working conditions” for the
Nation’s workers. 29 U.S.C. § 651(b). To that end, OSHA in
1992 issued the so-called Process Safety Management
Standard to protect the safety of those who work with or near
highly hazardous chemicals. From its inception, the standard
has exempted retail facilities from its requirements. The
exemption rests on an assumption that the retail setting
involves diminished risks of a substantial release of toxic
chemicals. Recently, after a catastrophic chemical explosion
at a Texas fertilizer company that qualified as an exempt retail
facility, OSHA narrowed the scope of the retail-facility
exemption so that the safety standard’s requirements would
now apply to formerly exempt facilities like the Texas plant.

The question we confront is whether, when OSHA
narrowed the scope of the exemption for retail facilities, the
agency issued a safety “standard” within the meaning of the
Occupational Safety and Health Act (OSH Act). If so, we
have jurisdiction to review OSHA’s action, and the OSH Act
would have required the agency to adhere to procedural
notice-and-comment requirements, which it concededly did
not do. If, however, OSHA’s action did not amount to
 3
issuance of a “standard,” we would lack jurisdiction to review
it and the OSH Act would have imposed no obligation to
follow notice-and-comment procedures.

Under our decisions, when an action by OSHA corrects a
particular hazard, as opposed to adjusting procedures for
detection or enforcement, it amounts to a “standard.”
Applying that understanding, we conclude that the agency’s
narrowing of the substantive scope of the exemption for retail
facilities qualified as issuance of a “standard.” We therefore
have jurisdiction, and OSHA was required to adhere to notice-
and-comment procedures. Consequently, we grant the
petitions for review and vacate OSHA’s action.

I.

In 1992, OSHA promulgated the Process Safety
Management (PSM) Standard in an effort to “provide safe and
healthful employment and places of employment for
employees in industries which have processes involving
highly hazardous chemicals.” Process Safety Management of
Highly Hazardous Chemicals; Explosives and Blasting
Agents, 57 Fed. Reg. 6356, 6359 (Feb. 24, 1992), codified at
29 C.F.R. § 1910.119 (2016). The PSM Standard “contains
requirements for preventing or minimizing the consequences
of catastrophic releases of toxic, reactive, flammable, or
explosive chemicals.” 29 C.F.R. § 1910.119.

From the outset, OSHA exempted “[r]etail facilities”
from the requirements of the PSM Standard. Id.
§ 1910.119(a)(2)(i). The exemption, OSHA explained in the
preamble of the final standard, was rooted in an understanding
that “chemicals in retail facilities are in small volume
packages, containers and allotments, making a large release
[of toxic chemicals] unlikely.” 57 Fed. Reg. at 6369. OSHA
 4
identified “gasoline stations” as prototypical examples of
retail facilities. Id. Shortly after promulgating the PSM
Standard, OSHA issued a letter defining an exempt retail
facility as “an establishment . . . at which more than half of
the income is obtained from direct sales to end users.” See
Letter from Patricia K. Clark, Dir. of Enf’t Programs, OSHA,
to Gary Myers, President, The Fertilizer Inst. (June 19, 1992).
The “50 percent test” remained the rule for more than two
decades.

In April 2013, a catastrophic chemical explosion at a
fertilizer company in West, Texas, resulted in the deaths of 15
persons and injured many others. Although the company
stored large quantities of a highly hazardous chemical
(anhydrous ammonia) for bulk distribution as fertilizer to
farmers, it had been exempt from the PSM Standard under the
50 percent test for retail facilities. That test had enabled
establishments to claim the exemption even if they stored
large amounts of hazardous chemicals for distribution in
wholesale quantities to commercial end users (including
farmers), as long as the distributions went directly to the end
users.

After the explosion at the West, Texas, fertilizer facility,
President Obama issued an executive order that, among other
things, directed the Secretary of Labor to “identify any
changes that need to be made in the retail . . . exemption[] in
the PSM Standard” so as to “meet the goal of preventing
major chemical accidents.” Improving Chemical Facility
Safety and Security, 78 Fed. Reg. 48029, 48032 (Aug. 1,
2013). OSHA responded in 2015 by issuing the
Memorandum at issue in this case. OSHA, Memorandum on
Process Safety Management of Highly Hazardous Chemicals
and Application of the Retail Exemption (29 C.F.R.
§ 1910.119(a)(2)(i)), July 22, 2015.
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The Memorandum “rescind[ed] all prior policy
documents, letters of interpretation, and memoranda related to
the retail exemption and the 50 percent test.” Id. OSHA
explained that the “50 percent test allows employers who sell
or distribute large, bulk quantities of highly hazardous
chemicals directly to end consumers to claim the exemption,
even if the end users are themselves commercial
establishments.” Id. That result was “directly contrary to
OSHA’s original intent,” i.e., “to exclude retail facilities from
PSM coverage because the small container, package, or
allotment sizes of the chemicals typically found at these
facilities do not present the same safety hazards as
establishments that handle large, bulk quantities of materials.”
Id. Concluding that the retail exemption “should never have
been interpreted to cover facilities engaged in distinctly
wholesale activities,” OSHA announced that retail facilities
would instead be defined by a Department of Commerce
manual classifying types of businesses. Id. Under that
definition, retail facilities must be “organized to sell
merchandise in small quantities to the general public.” Id.
Because farm supply establishments like the West, Texas,
facility sell chemical fertilizers in bulk to farmers, they fall
outside the revised definition of retail facilities. Id. Under
the new definition, those facilities thus would become subject
to the PSM Standard’s requirements for managing highly
hazardous chemicals.

II.

The Agricultural Retailers Association, the Fertilizer
Institute, and a number of individual businesses brought
petitions for review in this court to challenge OSHA’s
narrowed definition of retail facilities. According to
petitioners, the OSH Act required the agency to adhere to
 6
notice-and-comment procedures in promulgating its new
definition. We agree with petitioners.

The OSH Act authorizes the Secretary of Labor, through
OSHA, to promulgate “occupational safety [and] health
standard[s].” 29 U.S.C. § 655(b). The Act provides for pre-
enforcement review in the courts of appeals of any such
“standard” issued by OSHA. Id. § 655(f). The Act also
authorizes the promulgation of “regulation[s]” (and other
rules falling short of “standards”), which are governed by a
different means of judicial review: challenges to regulations
are brought under the Administrative Procedure Act (APA),
which calls for initial review in federal district court rather
than in a court of appeals. Id. § 657(c)(1); see also Edison
Elec. Inst. v. OSHA, 411 F.3d 272, 277 (D.C. Cir. 2005);
Workplace Health & Safety Council v. Reich, 56 F.3d 1465,
1467 (D.C. Cir. 1995).

The OSH Act provides for distinct treatment of
“standards” in another pertinent respect as well. When
promulgating or modifying a “standard,” OSHA must adhere
to notice-and-comment procedures set forth in the OSH Act.
29 U.S.C. § 655(b). OSHA concedes that, when it
promulgated its Memorandum redefining “retail facility,” it
did not satisfy the procedural requirements for standards. The
agency instead argues that the Memorandum did not issue or
modify a standard. In the agency’s view, the Memorandum
only interpreted an existing standard, and it therefore was
subject neither to the procedural requirements set out in the
OSH Act, id., nor to direct review in this court under that Act,
id. § 655(f).

The existence of jurisdiction in this court, as well as the
applicability of the OSH Act’s notice-and-comment
procedures, both turn on the same question: whether OSHA’s
 7
Memorandum amounted to issuance (or modification) of an
“occupational safety and health standard.” The OSH Act
defines an “occupational safety and health standard” as “a
standard which requires conditions, or the adoption or use of
one or more practices, means, methods, operations, or
processes, reasonably necessary or appropriate to provide safe
or healthful employment and places of employment.” Id.
§ 652(8).

Our decisions construing that definition have established
a framework for differentiating between OSHA standards and
regulations. A standard within the meaning of that definition
is “a remedial measure addressed to a specific and already
identified hazard, not a purely administrative effort designed
to uncover violations of the Act and discover unknown
dangers.” Workplace Health & Safety Council, 56 F.3d at
1468 (quoting La. Chem. Ass’n v. Bingham, 657 F.2d 777,
782 (5th Cir. 1981)). Standards, that is, are designed for
“correction rather than mere inquiry into possible hazards.”
Id. They focus on “correct[ing] a particular significant risk,”
not on “general enforcement.” Id. (quotation and internal
quotation marks omitted).

In Workplace Health & Safety Council, we applied that
understanding to find that a rule requiring employers to report
workplace deaths and hospitalizations was a regulation rather
than a standard. 56 F.3d at 1468. The “basic function of the
rule [was] administrative,” in that it principally served to
enable “collect[ing] information about unknown hazards.” Id.
We distinguished “information-gathering” measures of that
kind from the “correction of a particular significant risk.” Id.
(quotation and internal quotation marks omitted).

When we later applied the same framework in Chamber
of Commerce of the United States v. U.S. Department of
 8
Labor, 174 F.3d 206 (D.C. Cir. 1999), we reached the
opposite outcome with regard to the OSHA rule at issue in
that case. We determined that a compliance program
subjecting businesses to extra inspections if they did not
engage in specified safety measures amounted to a standard
rather than a regulation. That program aimed at “correcting,
rather than merely uncovering,” workplace safety hazards. Id.
at 210. It therefore could not “be described as merely an
enforcement or detection procedure.” Id. (quotation and
internal quotation marks omitted). Whereas the rule held to
be a regulation in Workplace Health & Safety Council was
“procedural,” the “basic function of the rule” in Chamber of
Commerce was “substantive,” in that it “impose[d] upon
employers new,” and “more demanding,” “safety standards”
than those in existence beforehand. Id. at 210-11.

Under the principles set forth in those decisions, we
conclude that OSHA’s new definition of a retail facility, like
the compliance program in Chamber of Commerce, amounts
to a standard. The “basic function” of OSHA’s new
definition is to address a “particular significant risk,” id. at
209: the risk associated with storing large quantities of highly
hazardous chemicals for distribution to end users in bulk
quantities, as had been the case at the West, Texas, fertilizer
company. OSHA’s Memorandum aims not just to gather data
about that risk or otherwise serve a general detection or
enforcement function, but instead to correct the risk by
subjecting facilities such as farm supply companies to the
preventative measures in the PSM Standard. OSHA estimates
that its revised definition would subject up to 4,800 facilities
to “new,” and necessarily “more demanding,” substantive
standards for the management of highly hazardous chemicals.
Id. at 211.
 9
Of course, the Memorandum itself does not require new
preventative measures of its own accord; it does so in
conjunction with the PSM Standard. But we do not look at
the Memorandum in strict isolation. We consider the
Memorandum’s “practical effect,” not “its formal
characteristics.” Id. at 209. And the essential effect and
object of the Memorandum is to expand the substantive reach
of the PSM Standard by narrowing an exemption from that
standard. As OSHA describes the measure, it aims to
eliminate “policy and regulatory gaps” so as to help “prevent
incidents like the West Fertilizer explosion.” OSHA,
Questions and Answers—PSM Retail Exemption Policy, July
22, 2015. By redefining retail facilities, the Memorandum, in
purpose and effect, subjects a substantial number of
businesses previously classified as exempt retail facilities to
additional safety standards in order to address a “particular
significant risk.” Given those specific circumstances, the
measure, under our decisions, qualifies as a standard within
the meaning of the OSH Act.

OSHA argues that the Memorandum cannot be a standard
because it would constitute an interpretive rule under the
APA. But nothing in the OSH Act or APA establishes that
the standard/non-standard distinction under the OSH Act must
directly track the legislative/interpretive rule distinction under
the APA. The OSH Act and the APA prescribe different
procedural requirements, and those requirements do not
necessarily apply to the same subset of rules. Unlike some
other statutes, the OSH Act does not adopt the “interpretive
rule” terminology, but instead uses a vocabulary distinct from
the APA’s. Compare 29 U.S.C. § 655, with 42 U.S.C.
§ 1395hh(c) (using the term “interpretive rules” in the
Medicare Act). And petitioners’ principal submission is that
they are entitled to relief under the OSH Act’s governing
 10
standards, a result that, in their view, renders the APA
irrelevant. Petitioners’ Reply Br. at 1-3.

We thus need not decide whether the rule at issue here
would constitute an interpretive rule for purposes of the APA.
Because the Memorandum amounts to a standard within the
meaning of the OSH Act, we have jurisdiction to review it
and to vacate it for failure to comply with the procedural
requirements established by that Act. Of course, nothing in
our decision necessarily calls into question the substance of
OSHA’s decision to narrow the exemption for retail facilities
and correspondingly to expand the scope of the PSM
Standard. We hold only that, insofar as OSHA does so, it
must follow the notice-and-comment procedures for standards
set forth in the OSH Act.

Finally, we consider the motion of the United Steel,
Paper and Forestry, Rubber, Manufacturing, Energy, Allied
Industrial and Service Workers International Union (the
Union) to intervene in support of OSHA. Mot. to Intervene
Out of Time Filed on Behalf of [the Union], Nov. 5, 2015.
We deny the motion because the Union has failed to establish
its standing to intervene. The Union submitted a declaration
saying that certain Union members “may” be affected by
OSHA’s action insofar as there are members whose
employers previously fit within the retail facility exemption
under the 50 percent rule but would no longer do so under the
Memorandum’s revised definition. Decl. of Michael J.
Wright ¶¶ 4-5 (attachment to Br. of Union). But because
nothing in the Union’s declaration establishes that the Union
does have such members, the Union has failed to demonstrate
standing. See Summers v. Earth Island Inst., 555 U.S. 488,
498 (2009). Although we deny the Union’s motion to
intervene for that reason, we grant the Union’s alternative
request to accord it amicus curiae status, and we thus have
 11
given full consideration to the Union’s arguments. See Rio
Grande Pipeline Co. v. FERC, 178 F.3d 533, 539 (D.C. Cir.
1999).

* * * * *

For the foregoing reasons, we grant the petitions for
review and vacate OSHA’s Memorandum for failure to abide
by the OSH Act’s procedural requirements. We also deny the
Union’s motion to intervene but grant it amicus status.

So ordered.