United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT February 21, 2005
Charles R. Fulbruge III
Clerk
No. 03-60958
ELAINE CHAO, Secretary, Department of Labor,
Petitioner--Cross-Respondent,
versus
OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION,
Respondent,
and
ERIK K. HO; HO HO HO EXPRESS, INC.; and HOUSTON FRUITLAND, INC.,
Respondents--Cross-Petitioners.
On Petition for Review of an Order of the
Occupational Safety and Health Review Commission
Before BARKSDALE, GARZA, and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
This appeal stems from a final order of Respondent
Occupational Safety and Health Review Commission (the
“Commission”), which vacated in part citations issued by
Petitioner--Cross-Respondent Elaine Chao, Secretary of Labor (the
“Secretary”), against Respondents--Cross-Petitioners Eric K. Ho
(“Ho”), et al. (together, “Ho Respondents”). For the following
reasons, we DENY the petitions for review and AFFIRM the decision
of the Commission.
BACKGROUND
The penalties assessed by the Secretary and mostly affirmed by
the Administrative Law Judge (“ALJ”) and the Commission against Ho
for various violations of the Occupational Safety and Health Act,
29 U.S.C. §§ 651-678 (“OSH Act”), and associated safety and health
regulations all concern his behavior as proprietor of a worksite
where workers were exposed to asbestos in the course of a project
to renovate a building. On October 27, 1997, Ho individually
purchased a defunct hospital and medical office building in Houston
to develop the property as residential housing. Ho knew there was
asbestos onsite. He was also aware that any alteration to
asbestos-containing materials was to be handled by personnel
licensed and registered with the Texas Department of Health
(“TDH”). Ho instead hired Manuel Escobedo (“Escobedo”) and Corston
Tate (“Tate”), whose work he had previously used, to do the
renovations. Escobedo hired 11 Mexican nationals, who were illegal
immigrants, to assist. Renovations, including the removal of
asbestos, started in January 1998.
At most, the workers were occasionally given dust masks not
suitable for protection against asbestos. They were not issued
protective clothing. Ho also did not provide a respiratory
2
protection program, conduct medical surveillance, conduct asbestos
monitoring, implement adequate ventilation or debris removal,
inform the workers of the presence and hazards of asbestos, or
provide any training whatsoever. There is no dispute that Ho was
aware of the worksite conditions; he visited almost every day.
On February 2, 1998, a city inspector visited the worksite.
After observing the conditions, he issued a stop-work order citing
the possibility of exposure to asbestos, requiring that city
approval be given before work could resume. Ho then began
negotiating with a licensed contractor, Alamo Environmental
(“Alamo”), to remove the asbestos. Alamo prepared an abatement
estimate in accordance with Occupational Safety and Health
Administration (“OSHA”), amongst other federal, guidelines. On
March 27, 1998, Ho notified Alamo by fax that he agreed to their
proposal.
However, during this period of negotiation, Ho had resumed
work at the site under the same conditions, except that he directed
all work be performed at night. The workers ate, and some lived,
at the site. The workers had no potable water and only one
portable toilet. Tate sometimes allowed workers to leave the
property to use the restroom at a nearby commercial establishment;
and Tate would purchase and bring back food for the workers when
they gave him money. Ho continued to visit the worksite and was
aware of these conditions.
Asbestos removal continued in this fashion until March 10,
3
1998. On March 11, 1998, as Ho had directed, daytime work resumed
at the site. Ho had been informed that either the sprinkler system
or fire hydrant valves had not been turned off and thus remained
available for use. To wash out the building, Ho directed Tate to
tap into an unmarked valve believed to be a water line. It turned
out to be a gas line. An explosion later occurred when Tate
started his truck; it injured Tate and two workers. On March 12,
1998, workers were summoned to Ho’s office where they were given
releases to sign, acknowledging receipt of $1000 as full payment
for their work, and acknowledging receipt of $100 to release Ho
from any claims that might arise from the explosion and fire. The
releases were written in English, but an interpreter translated
them for the workers.
After the explosion, TDH conducted an investigation. Samples
of debris and the ambient air at the worksite showed levels of
asbestos in excess of federal and state standards. The state
notified Ho that the site remained unsafe and needed to be sealed
by qualified personnel. Again, Ho used the same workers to install
plywood over the windows and did not give them any protective
equipment.
OSHA also conducted an investigation. As a result, the
Secretary issued a total of 10 serious and 29 willful violations
against Ho Respondents; these charges included 11 willful
violations of 29 C.F.R. § 1926.1101(h)(1)(i) for failing to provide
respirators to 11 employees removing asbestos and 11 willful
4
violations of 29 C.F.R. § 1926.1101(k)(9)(i) and (viii) for failing
to train the 11 employees on the hazards of asbestos and safety
precautions. The Secretary also charged Ho Respondents with
willfully violating the OSH Act’s general duty clause, 29 U.S.C. §
654(a)(1), by ordering Tate to tap into the unmarked pipeline. Ho
was also convicted of criminal violations of the Clean Air Act
(“CAA”). This Court upheld his conviction. United States v. Ho,
311 F.3d 589, 611 (5th Cir. 2002).
Ho conceded before the ALJ that he violated the asbestos
respirator and training standards. Ho argued that he was not
subject to the OSH Act’s requirements because he was not engaged in
a business affecting interstate commerce and that the corporate Ho
Respondents should be dismissed because they were not employers of
the employees engaged in asbestos removal. He also challenged the
per-employee citations of the respirator and training violations.
Finally, Ho contended he did not violate the general duty clause of
the OSH Act, or if he had violated it, that such violation was not
willful.
The ALJ ruled that Ho’s construction activities affected
interstate commerce and Ho was liable for the OSH Act violations.
He also found the corporate Ho Respondents liable as alter egos of
Ho and under the “sham to perpetuate a fraud” doctrine because Ho
exercised control over both corporations and used them to obtain
funds to purchase and renovate the property. The ALJ determined
5
the respirator and training violations were willful and upheld all
22 violations. The ALJ found also that Ho had violated the general
duty clause of the OSH Act but that it could not be characterized
as a willful violation because the Secretary failed to show that Ho
actually knew of the danger or had a heightened awareness of the
illegality of his conduct.
On review, the Commission affirmed that Ho was subject to the
OSH Act and that Ho’s violations of the respirator and training
standards were willful. A divided Commission ruled that such
violations were to be cited on a per-instance, not a per-employee,
basis because it felt that the regulations plainly imposed a duty
on employers to have a single training program and to provide
respirators to the employees as a group. It thus vacated all but
two of those citations. The Commission also concluded the record
did not support the ALJ’s finding that the corporate Ho Respondents
were liable because these entities’ primary business activities had
nothing to do with the hospital renovation and they did not exist
as mere business conduits for Ho’s own purposes.1 The Commission
affirmed the ALJ’s finding that the general duty violation
committed by Ho was not willful. The Commission also increased all
the citations affirmed to their maximum penalties because of Ho’s
lack of good faith. The Secretary timely filed her petition for
1
Although the Commission determined the corporate Ho Respondents
were not liable under both the “alter ego” and “sham to perpetuate
a fraud” theories, the Secretary did not brief any argument based
on the “sham” doctrine. Thus, we do not address it.
6
review, and the Ho Respondents timely filed their cross-petition.
DISCUSSION
Whether the Commission’s factual finding that Ho’s illegal asbestos
abatement activities at the hospital worksite affected interstate
commerce was supported by substantial evidence.
The OSH Act applies to employers, defined as “person[s]
engaged in a business affecting commerce who ha[ve] employees.” 29
U.S.C. § 652(5) (1970). By enacting the OSH Act, Congress intended
to exercise the full extent of the authority granted by the
Commerce Clause. Austin Road Co. v. OSHRC, 683 F.2d 905, 907 (5th
Cir. 1982). “Accordingly, an employer comes under the aegis of the
[OSH] Act by merely affecting commerce; it is not necessary that
the employer be engaged directly in interstate commerce.” Id.
(citations omitted).
The Secretary bears “the burden of showing that the employer’s
activities affect interstate commerce.” Id. at 907. This burden
is “modest, if indeed not light.” Id. On appeal, this Court only
reviews the Commission’s findings of fact to ensure they are
“supported by substantial evidence in the record considered as a
whole.” Id. at 908; see also 29 U.S.C. § 660(a). Substantial
evidence is “such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.” Consolo v. Fed. Mar.
Comm’n, 383 U.S. 607, 619-20 (1966) (citation omitted).
Ho Respondents argue that the Secretary put forth no evidence
to support the Commission’s finding that the building renovation
7
was a business affecting interstate commerce. Because the
Secretary failed to provide jurisdictional evidence, Ho Respondents
contend none of them was subject to the OSH Act. Moreover, Ho
Respondents charge the Secretary cannot rely on the Commission’s
finding of fact because the Commission relied on an inapplicable
Ninth Circuit per se rule, see Usery v. Lacy, 628 F.2d 1226, 1229
(9th Cir. 1980) (extending OSH Act reach over employers in the
construction industry whose “whose activities in the aggregate
affect commerce”), and a nonpreclusive jurisdictional finding of
this Court in the criminal action against Ho based on the
“aggregate” effect on interstate commerce of asbestos removal
violations under the CAA, see Ho, 311 F.3d at 603-04.
The Secretary responds that she provided evidence that Ho was
engaged in a business affecting interstate commerce and was
therefore subject to the OSH Act. The Secretary points out Ho had
a majority interest in two interstate trucking firms (Ho Ho Ho
Express being one). Alternatively, the Secretary argues Ho’s
asbestos abatement activities at the hospital site constituted a
business affecting interstate commerce. The Secretary notes this
Court has previously held that Ho’s illicit asbestos operations at
the hospital site, when aggregated, affected the interstate markets
in asbestos removal services and commercial real estate in the
context of Ho’s CAA criminal case. Id. The Secretary maintains
Ho’s activities at the hospital were specifically found to affect
8
interstate commerce substantially enough to support federal
regulation; this issue cannot be relitigated. The Secretary also
argues Ho misreads Austin Road to impose an evidentiary hurdle to
defeat even normal application of collateral estoppel.
Even if this Court does not find jurisdiction based on
collateral estoppel, the Secretary stresses she presented evidence
showing that, by failing to comply with the OSH Act requirements,
Ho gained a competitive advantage over licensed asbestos firms,
including Alamo, and deprived them of a commercial business
opportunity in the national market for asbestos removal. Moreover,
the Secretary argues Ho’s illicit asbestos removal project also
would increase asbestos removal costs for law-abiding commercial
property owners.
This Court in Ho’s criminal appeal clearly indicated that his
specific illicit construction activities concerning asbestos
abatement, when considered in the aggregate, directly affected
interstate commerce in the national market of asbestos removal.
Ho, 311 F.3d at 603-04. In finding that the challenged provisions
of the CAA constitutionally reached Ho under the Commerce Clause,
we stated that “a national market exists for asbestos removal
services” and that “Ho’s activities would injure this market.” Id.
at 603. We also stated that Ho’s illegal asbestos abatement
activities in the aggregate “posed a threat to the interstate
commercial real estate market” because they “would reduce the
9
number of companies providing asbestos removal services” and
“conscientious property owners would have more trouble locating
licensed abatement companies and likely would have to pay higher
prices.” Id. at 604.
Here, though we are informed by the aggregation principle’s
application to asbestos removal activities outlined in Ho, as the
Commission was also so informed, we do not rest the instant
jurisdictional result based on collateral estoppel or issue
preclusion from Ho’s criminal CAA case.2 Nor do we have before us
the constitutionality of any provision of the OSH Act or
accompanying regulation. We also do not recognize the Ninth
Circuit per se construction rule Ho Respondents insist was adopted
by the Commission in its decision. Instead, pursuant to Austin
Road, we consider whether the Commission’s factual finding that
Ho’s illegal asbestos abatement activities at the hospital worksite
affected interstate commerce was supported by substantial evidence
in the record.
2
It would not be prudent to do so because even if Ho Respondents
had presented any constitutional challenge to the specific OSH Act
and implementing regulations at issue here, these provisions are
entirely different from the Clean Air Act (“CAA”) provisions
challenged in the prior criminal litigation. Thus, the issue at
stake here would not be “the precise constitutional claim” involved
in the prior litigation. See Montana v. United States, 440 U.S.
147, 156-57 (1979) (finding tax provision of Montana’s Revenue Code
was constitutional under the Supremacy Clause via collateral
estoppel where identical provision had previously been found to
pass muster). Moreover, we specifically stressed that the holding
in Ho was limited to that CAA criminal case. United States v. Ho,
311 F.3d 589, 594 (5th Cir. 2002).
10
Despite Ho Respondents’ arguments, there is sufficient record
evidence that Ho specifically deprived the asbestos removal firm
Alamo of a legitimate commercial job to remove asbestos from the
hospital site in accordance with the OSH Act. Ho negotiated with,
but did not actually employ, Alamo to perform the licensed
abatement. Instead, Ho hired illegal immigrants to remove the
asbestos for $1000 each before he ever agreed to Alamo’s proposal.
This evidence indicates in the context of the OSH Act, similar to
what this Court has already analyzed in the context of the CAA,
that Ho’s asbestos removal activities affected interstate commerce
by depriving legitimate commercial asbestos abatement firms of the
opportunity to perform the work at the site. Ho’s deliberate
decision to have unlicensed workers perform the asbestos abatement
project sidestepped, and thus supplanted, a commercial firm that
operates within the legitimate national market for asbestos removal
services, a licensed firm which adheres to OSH Act provisions and
regulations. We find Ho’s illegal asbestos activities sufficiently
affected interstate commerce so as to be subject to the OSH Act.
Unlike in Austin Road, here the essential fact that Ho’s abatement
activities affected interstate commerce is not speculative and
conclusionary, but rather is established in the record. See 683
F.2d at 908.
The Secretary thus met her modest jurisdictional burden under
the OSH Act. See id. at 907. Therefore, on this record, we find
11
substantial evidence exists to support the Commission’s factual
finding that Ho’s activities sufficiently affected interstate
commerce to support the OSH Act’s jurisdictional reach over Ho as
an employer per § 652(5).
Whether the Commission’s factual findings that Ho Ho Ho Express,
Inc. and Houston Fruitland, Inc. were not alter egos of Ho to
support reverse corporate piercing were supported by substantial
evidence.
In the typical corporate veil piercing scenario, the corporate
veil is pierced such that individual shareholders can be held
liable for corporate acts. Maiz v. Virani, 311 F.3d 334, 346 n.11
(5th Cir. 2002). Here, the purpose of piercing the corporate veils
of Ho Ho Ho Express, Inc. and Houston Fruitland, Inc. would be to
hold the corporations liable for the acts of their individual
shareholder, Ho. See id. Therefore, this case presents a “reverse
corporate veil piercing” situation. Id. “This slight variation is
of no consequence, however, because the end result under both views
is the same – two separate entities merge into one for liability
purposes.” Id. If alter ego is shown, courts reverse pierce the
corporate veil to treat the individual and the corporation as “one
and the same.” Zahra Spiritual Trust v. United States, 910 F.2d
240, 244 (5th Cir. 1990) (citation omitted).
In Permian Petroleum Co. v. Petroleos Mexicanos, 934 F.2d 635
(5th Cir. 1991), this Court considered whether a corporate form
should be reverse pierced for purposes of a natural gas contract
12
dispute. Id. at 643. There, we determined that an alter ego
relationship for purposes of reverse veil piercing applies where
“there is such unity between corporation and individual that the
separateness of the corporation has ceased.” Id. (citation
omitted). Factors involved in this test for an alter ego
relationship include:
[T]he total dealings of the corporation and the
individual, including the degree to which corporate
formalities have been followed and corporate and
individual property have been kept separately, the amount
of financial interest, ownership and control the
individual maintains over the corporation, and whether
the corporation has been used for personal purposes.
Id. at 643 (citing Castleberry v. Branscrum, 721 S.W.2d 270, 272
(Tex. 1986)). In Century Hotels v. United States, 952 F.2d 107
(5th Cir. 1992), we considered whether a family-held corporate form
should be reverse pierced for the 26 U.S.C. § 7426 tax liability of
an individual family member. Id. at 110-112. There, we indicated
the reverse veil piercing alter ego analysis depends on the
factfinder’s weighing of the totality of the circumstances. Id. at
110; see also Bridas S.A.P.I.C. v. Gov’t of Turkmenistan, 345 F.3d
347, 359-60 (5th Cir. 2003) (finding legal error where district
court failed to consider totality in parent-subsidiary alter ego
case); United States v. Jon-T Chems., Inc., 768 F.2d 686, 694 n.8,
696 (5th Cir. 1985) (noting alter ego depends on totality in case
where subsidiary company was found to be alter ego of parent
company). As the Commission correctly noted, this Circuit has not
13
determined the extent of reverse veil piercing via the alter ego
theory in the context of remedial social legislation such as the
OSH Act. However, as a logical application of Permian and Century
Hotels, we agree with the Commission that reverse corporate veil
piercing may apply in this context.3
“The question of whether to pierce the corporate veil is
primarily one of fact and therefore a very deferential standard of
review applies.” Hollowell v. Orleans Regional Hosp. LLC, 217
F.3d 379, 385 (5th Cir. 2000) (discussing piercing the corporate
veil via alter ego theory) (citation omitted); see also Bridas, 345
F.3d at 359 (describing alter ego determination as “highly fact-
based”). “In reviewing a decision by an administrative agency, we
accept all factual findings supported by substantial evidence in
the record considered as a whole.” Austin Road, 683 F.2d at 908.
We are thus bound by the Commission’s factual findings on alter ego
if they are supported by substantial evidence in the record. MICA
Corp. v. OSHRC, 295 F.3d 447, 449 (5th Cir. 2002); See also 29
U.S.C. § 660(a) (1970) (stating such findings are conclusive).
The Secretary challenges the Commission’s finding that the
corporate Ho Respondents were not suitable parties for liability
3
We provide no discussion of whether state or federal alter ego
law applies in this administrative case not arising under diversity
jurisdiction. See Century Hotels v. United States, 952 F.2d 107,
110 n.4 (5th Cir. 1992) (noting “state and federal alter ego tests
are essentially the same” and we “apply state and federal cases
interchangeably”).
14
under the OSH Act. The Secretary argues Ho used Ho Ho Ho Express
and Houston Fruitland as mere business conduits for his illegal
asbestos removal activities. The Secretary relies on the alter ego
doctrine – that because Ho had control over the corporate Ho
Respondents, the limited liability of the corporate form should be
“reverse pierced” to hold the corporations liable for the debts of
their controlling shareholder. See Century Hotels, 952 F.2d at
110-12; Permian, 934 F.2d at 643. The Secretary focuses on the
high ownership shares of Ho in the corporations, approximately 67
percent; the commingling of funds between the corporations and Ho;
and the fact that funding for the purchase of the hospital site and
payment for the renovation supplies and wages came from the
corporations.
Ho Respondents agree with the Commission’s findings that the
corporate Ho Respondents were not the alter egos of Ho to support
reverse piercing them for the purpose of imposing liability. Ho
Respondents argue that substantial evidence supports the
Commission’s factual findings that the corporate Ho Respondents did
not engage in the asbestos removal activities at issue and were not
the employers of the workers at the site. Also, Ho Respondents
stress the Commission was correct in finding Ho’s corporations were
legitimate operating entities on their own.
Ho Respondents concede that a Ho Ho Ho Express truck was
parked once at the worksite, and Ho did engage in corporate
15
borrowing between the entities. However, Ho Respondents stress
that all the respective corporate accounts and ledgers were
legitimately debited and credited for each borrowing transaction.
Moreover, the corporate Ho Respondents did not provide any
employees to the site. Ho Respondents thus contend the Commission
correctly reviewed the totality of the facts to determine that
there was no alter ego relationship here. See Jon-T Chems., 768
F.2d at 692. Ho Respondents maintain reverse piercing was not
warranted because it is clear here that Ho and the corporate Ho
Respondents could not be treated as “one and the same.” See Zahra,
910 F.2d at 243-44. Ho Respondents point out there is no evidence
that the corporate Ho Respondents were operated in a manner
indistinguishable from Ho’s personal affairs.
The Commission employed the proper legal standard for reverse
corporate piercing based on alter ego because it considered the
totality of the Permian factors in Ho’s case. See Bridas, 345 F.3d
at 359-60 (finding legal error because the district court’s
determination of no alter ego was based solely on corporate
formalities). Thus, we determine whether the Commission’s factual
findings that Houston Fruitland and Ho Ho Ho Express should not be
considered as alter egos of Ho under that totality were supported
by substantial evidence. After a thorough review of the record, we
conclude that they were. The Secretary’s contention that Ho Ho Ho
Express and Houston Fruitland were “nothing more than incorporated
16
pocketbooks for Ho’s personal use” is unfounded. Although Ho
clearly involved some of the corporate entities’ finances in his
hospital project, the record evidence indicates that Ho as the
individual in charge of this particular renovation project remained
distinct from the corporate Ho Respondents as ongoing, formalized
fruit sale and delivery entities.
While there is evidence that Ho played a role in the corporate
Ho Respondents’ day-to-day operations, and Ho’s personal assistant
employed by Ho Ho Ho Express ran some errands for Ho concerning the
renovation project, Houston Fruitland and Ho Ho Ho Express still
maintained entirely separate corporate identities, tax identities,
bank accounts, and legitimate business operations. This is not a
case such as Century Hotels where payment of a family shareholder’s
personal expenses, funding of his son’s checking account, and
ownership of the personal family residence could directly be traced
back to the family companies. 952 F.2d at 111-12. There, “the
patterns of dealing among the Smith family companies” distinctly
showed “[use of] the corporate form for illegitimate ends.” Id. at
112. In contrast, the record evidence here indicates that the
corporate Ho Respondents had a limited financial stake in Ho’s
renovation project, not that they functioned as his alter egos on
the renovation project.
Although Ho borrowed from the corporate Ho Respondents for
financing of the hospital project, an admittedly personal pursuit,
17
the record evidence indicates distinct debit ledger entries and
some repayment to the corporations by Ho. This fact also
distinguishes Ho’s case from Century Hotels. See 952 F.2d at 111
n.12 (noting the lack of evidence of “loan” repayment). Moreover,
there is no evidence that the corporate entities were ever treated
or confused as one and the same with the individual Ho or his
personal dealings. Admittedly, here, the alter ego question is not
as readily resolved as in Century Hotels. However, to affirm the
Commission’s findings on alter ego, this Court need only look for
“such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.” Consolo, 383 U.S. at 619-20
(citation omitted).
We find substantial evidence in the record adequately
supporting that the totality of the factors under the Permian alter
ego test did not indicate “such unity between corporation[s] and
individual that the separateness of the corporation[s] ha[d]
ceased.” 934 F.2d at 643 (citation omitted). Therefore, this
Court is bound by the Commission’s findings that Ho Ho Ho Express
and Houston Fruitland were not alter egos of Ho to support reverse
corporate piercing.
Whether the Commission’s legal conclusion that Ho did not willfully
violate the general duty clause, § 654(a)(1), of the OSH Act, was
arbitrary, capricious, an abuse of discretion, or not in accordance
with law.
Section 654(a)(1) of the OSH Act requires employers to free
their workplaces of “recognized hazards that are causing or are
18
likely to cause death or serious physical harm to . . . employees.”
29 U.S.C. § 654(a)(1) (1970).4 The specific general duty citation
here arose from the explosion of natural gas released by tapping an
unmarked valve. A willful violation is one committed voluntarily,
with either intentional disregard of, or plain indifference to, OSH
Act requirements. Georgia Elec. Co. v. Marshall, 595 F.2d 309, 318
(5th Cir. 1979). “‘Willful’ means action taken knowledgeably by
one subject to the statutory provisions in disregard of the
action's legality.” Id. at 317 (quoting Intercounty Constr. Co. v.
OSHRC, 522 F.2d 777, 779-80 (4th Cir. 1975)). In contrast, “[t]he
gravamen of a serious violation is the presence of a ‘substantial
probability’ that a particular violation could result in death or
serious physical harm.” Id. at 318. The employer’s intent to
violate an OSH Act standard is irrelevant to find a serious
violation. Id. The Commission’s legal conclusions can only be set
aside if they are arbitrary, capricious, an abuse of discretion, or
not in accordance with law. MICA Corp., 295 F.3d at 449 (citation
omitted).
The Secretary argues the Commission’s finding that Ho’s
4
The general duty clause of the OSH Act provides, in part:
(a) Each employer--
(1) shall furnish to each of his employees employment and a
place of employment which are free from recognized hazards
that are causing or are likely to cause death or serious
physical harm to his employees . . . .
29 U.S.C. § 654(a)(1) (1970).
19
violation of § 654(a)(1) was not willful was based on an erroneous
legal standard requiring direct evidence of Ho’s state of mind.
The Secretary contends Ho demonstrated plain indifference in
directing Tate to tap into the unmarked pipeline in an attempt to
procure water for washing the building. According to the
Secretary, this was a clear violation of the stop-work order Ho
received in February. Therefore, the Secretary maintains Ho knew
tapping into the pipeline without approval was illegal, even if he
may not have known of the specific explosion hazard or that it was
a violation of the general duty clause of the OSH Act. The
Secretary argues direct evidence of Ho’s state of mind was not
required because proof of Ho’s plain indifference to legal
requirements in general was clearly established.
Ho Respondents reply that the Commission was correct to find
that the Secretary had not met her burden of proof in showing Ho’s
violation as rising to the intent of willful. Ho Respondents
maintain the Commission applied the correct legal standard, and
substantial evidence on the record supports its decision that the
§ 654(a)(1) violation was not willful. Ho respondents argue the
Commission’s reference to direct evidence amounted to a recognition
that the Secretary had not put forth any evidence relevant to the
specific circumstances of the violation in question. Ho
Respondents emphasize that the Secretary did not put forth any
evidence of Ho’s state of mind to show that he had a heightened
awareness that instructing Tate to open the valve might be
20
hazardous or that Ho consciously disregarded a known safety hazard
related to the valve – that is, for this action to meet a showing
of either intentional disregard of the OSH Act or plain
indifference to employee safety. Ho Respondents stress there was
no evidence directed to the intent accompanying this particular
incident.
The Secretary argues that Ho’s action here was part of a
consistent illegal and voluntary course of conduct; all his actions
were plainly indifferent to employee safety. However, although
there may be evidence of a conscious pattern of illegal work
practices by Ho with regard to the asbestos abatement, the
challenged violation of the general duty clause does not concern
Ho’s many asbestos transgressions covered specifically by OSH Act
regulations. See Reich v. Arcadian Corp., 110 F.3d 1192, 1196 (5th
Cir. 1997). In particular, it related to an employee being
required to open a pipe of unknown content. Here, the Secretary
presented no evidence relevant to Ho’s state of mind on, or
recognition of the hazards of, this particular action to direct
Tate to open the unmarked valve. We thus agree with the Commission
that plain indifference as to this specific hazardous action cannot
be inferred, even from Ho’s several OSH Act violations concerning
the asbestos removal project.
Though the evidence need not indicate “bad purpose” or “evil
motive” to commit a particular act, Georgia Elec. Co., 595 F.2d at
21
319 n.23, there must be evidence of that “extra ingredient needed
for willfulness, either the element of intentional disregard or
plain indifference.” Id. at 318 n.22 (internal quotation marks
omitted). None existed in this record. Though Ho’s pattern of
illegal work practices may have been conscious, and his asbestos-
related OSH Act violations found to be willful, this does not
compel a finding of willfulness as to his specific instruction to
open the unmarked valve. See id. Therefore, because the
Commission’s legal determination as to Ho’s lack of willfulness
under § 654(a)(1) was neither arbitrary, capricious, nor an abuse
of discretion, and accords with law, we accept its conclusion.
Whether the citations against Ho should have been assessed on a
per-employee or per-instance basis.
The Secretary’s discretion to cite multiple violations of an
OSH Act standard is restricted “to those standards which are
capable of such interpretation.” Sec. of Labor v. The Hartford
Roofing Co., Inc., 1995 WL 555498, at *6 (O.S.H.R.C.). “The test
of whether the [OSH] Act and the cited regulation permits multiple
or single units of prosecution is whether they prohibit individual
acts, or a single course of action.” Sec. of Labor v. Caterpillar,
Inc., 1993 WL 44416, at *22 (O.S.H.R.C.) (citation omitted). “With
few exceptions, the Commission has not affirmed multiple violations
for violations of the same standard, or affirmed separate
violations or penalties on a per employee exposed basis.” Id. at
22
*23. The Commission here determined that the plain language of the
training and respirator subsections of the asbestos standard at
issue prescribed a single work practice instead of conduct unique
and specific to each employee. It thus only affirmed one training
and one respirator citation against Ho.
The Secretary argues the per-employee citations for asbestos
training and respirator violations, with which she charged Ho
Respondents, should have been affirmed by the Commission. The
Secretary maintains that each time an employer commits a prohibited
act or allows a prohibited condition to exist, the employer
violates the OSH Act. The Secretary contends the Commission’s
analysis ignores the standards’ plain language and the established
test for determining which conditions or actions constitute
separate violations under the OSH Act, as enunciated in the
Commission’s own prior cases and in this Court’s caselaw. The
Secretary insists the Commission also ignored basic precepts of
prosecutorial discretion.
The Secretary argues that if a standard prohibits individual
acts or conditions, the standard is violated each time the
prohibited act or condition occurs. See Sec. of Labor v. Andrew
Catapano Enters., Inc., 1996 WL 559899, at *9-10 (finding each
location at site where shoring in trench to prevent cave-in was not
installed was violation of 29 C.F.R. § 1926.652(b)); Sec. of Labor
v. J.A. Jones Constr. Co., 1993 WL 61950, at *14 (O.S.H.R.C.)
23
(finding each location at site lacking fall protection was
violation of 19 C.F.R. § 1926.500); Caterpillar, 1993 WL 44416, at
*22-23 (finding each employer failure to record an employee’s
injury or illness on its OSHA log was violation of 29 C.F.R. §
1904.2(a)); Sec. of Labor v. Hoffman Constr. Co., 1978 WL 6990, at
*1 (O.S.H.R.C.) (finding each failure to erect a guardrail on
scaffolding was violation of 29 C.F.R. § 1926.451(a)(4)).
The general construction training standard, 29 C.F.R. §
1926.21(b)(2),5 which requires employers to “instruct each employee
in the recognition and avoidance of unsafe conditions,” has been
interpreted as being citable on a per-employee basis. Catapano,
1996 WL 559899, at *4-5. Portions of the lead standard have also
been interpreted as permitting per-employee citations because the
standard’s medical removal subsection, 29 C.F.R. §
1910.1025(k)(1)(i)(D),6 and respirator fit-test subsection, 29
5
Section 1926.21, Safety training and education, provides, in
part:
(b) Employer responsibility.
...
(2) The employer shall instruct each employee in the
recognition and avoidance of unsafe conditions and the
regulations applicable to his work environment to control or
eliminate any hazards or other exposure to illness or injury.
29 C.F.R. § 1926.21(b)(2) (1989).
6
Section 1910.1025, Lead, provides, in part:
(k) Medical Removal Protection.
(1) Temporary medical removal and return of an employee.
(i) Temporary removal due to elevated blood lead levels.
24
C.F.R. § 1910.1025(f)(3)(ii),7 required evaluation of individual
employees. Sec. of Labor v. Sanders Lead Co., 1995 WL 242606, at
*3, *6 (O.S.H.R.C.). But see Arcadian, 110 F.3d at 1196-99
(finding general duty clause of OSH Act directed at hazardous
conditions did not allow per-employee citations but noting that
worker training or removal standards could count each employee as
the unit of violation); Hartford Roofing, 1995 WL 555498, at *6-7
...
(D) Fifth year of the standard, and thereafter. Beginning with
the fifth year following the effective date of the standard,
the employer shall remove an employee from work having an
exposure to lead at or above the action level on each occasion
that the average of the last three blood sampling tests
conducted pursuant to this section (or the average of all
blood sampling tests conducted over the previous six (6)
months, whichever is longer) indicates that the employee's
blood lead level is at or above 50 micrograms per 100 g of
whole blood; provided, however, that an employee need not be
removed if the last blood sampling test indicates a blood lead
level at or below 40 micrograms per 100 g of whole blood.
29 C.F.R. § 1910.1925(k)(1)(i)(D) (1986).
7
Section 1910.1025, Lead, provides, in part:
(f) Respiratory protection.
...
(3) Respirator usage.
...
(ii) Employers shall perform either quantitative or
qualitative face fit tests at the time of initial fitting and
at least every six months thereafter for each employee wearing
negative pressure respirators. The qualitative fit tests may
be used only for testing the fit of half-mask respirators
where they are permitted to be worn, and shall be conducted in
accordance with Appendix D. The tests shall be used to select
facepieces that provide the required protection as prescribed
in table II.
29 C.F.R. § 1910.1025(f)(3)(ii) (1986).
25
(finding one unguarded roof edge requiring warning was single
violation of 29 C.F.R. § 1926.500(g)(1)(i) and § 1926.500(g)(4) no
matter how many employees were exposed to a fall but noting that
the respirator protection standard, 29 C.F.R. § 1910.134, could
count a separate violation as to each employee not provided a
respirator). Neither the Secretary nor Ho Respondents advance any
Fifth Circuit or Commission precedent interpreting the asbestos
standard.
As to training violations, the Secretary maintains that Ho
violated § 1926.1101(k)(9)(i) and (viii)8 of the asbestos
regulations each time he assigned a worker to remove asbestos
without providing the worker with individual training about the
hazards of asbestos removal and about the required safeguards
against those hazards. The Secretary bases this argument on the
8
Section 1926.1101, Asbestos, provides, in part:
(k) Communication of hazards.
...
(9) Employee Information and Training.
(i) The employer shall, at no cost to the employee, institute
a training program for all employees who are likely to be
exposed in excess of a PEL and for all employees who perform
Class I through IV asbestos operations, and shall ensure their
participation in the program.
...
(viii) The training program shall be conducted in a manner
that the employee is able to understand. In addition to the
content required by provisions in paragraphs (k)(9)(iii)
through (vi) of this section, the employer shall ensure that
each such employee is informed of the following:
....
29 C.F.R. § 1926.1101(k)(9)(i) and (viii) (1997).
26
plain language of the regulation: employers are to conduct the
training program “in a manner the employee is able to understand .
. . [so] that each such employee is informed.” 29 C.F.R. §
1926.1101(k)(9)(viii) (1997). According to the Secretary, this
language requires tailoring the training to each individual
employee’s characteristics and comprehension, not to mention
language skills and hire date. The Secretary argues Arcadian, 110
F.3d at 1199, supports this reading of the regulation. Also, the
Secretary notes Catapano reached a per-employee result with the
analogous general construction training standard. 1996 WL 559899,
at *4-5.
As to respirator violations, the Secretary points again to the
plain language of § 1926.1101(h)(1)(i): “[t]he employer shall
provide respirators, and ensure that they are used . . . [d]uring
all Class I asbestos jobs.” 29 C.F.R. § 1926.1101(h)(1)(i)
(1997).9 The Secretary notes that this standard goes on in later
subsections to explain that each employee is to be provided an
appropriate, approved, properly fitted respirator. See id. §
9
Section 1926.1101, Asbestos, provides, in part:
(h) Respiratory protection.
(1) General. The employer shall provide respirators, and
ensure that they are used, where required by this section.
Respirators shall be used in the following circumstances:
(i) During all Class I asbestos jobs.
29 C.F.R. § 1926.1101(h)(1)(i) (1997).
27
1926.1101(h)(2)(iii) (allowing employee to choose air-purifying
versus negative-pressure respirator); id. § 1926.1101(h)(4)(i) and
(ii) (mandating fit tests to ensure least possible faceplate
leakage). As with the individualized training sessions, the
Secretary argues each of Ho’s 11 employees required a personally
fitted respirator that the employee had chosen. Thus, Ho was
required to take employee-specific actions. Again, the Secretary
cites Arcadian, 110 F.3d at 1199. The Secretary also relies on
Sanders Lead, 1995 WL 242606, at *6, which discussed the lead
respirator fit-testing standard. See also Hartford Roofing, 1995
WL 555498, at *7 (noting that the respirator protection standard
could be counted as a separate violation for each employee not
provided a respirator).
In addition, the Secretary maintains the Commission used a
flawed analysis to interpret the training and respirator
regulations. The Secretary argues a training program is
meaningless unless implemented on an individual basis. Likewise,
Ho was required to give each worker an individual respirator. This
was not a single, discrete act, but rather required initial fitting
and then periodic refitting for each worker. The Secretary
suggests a nonsensical reading would ensue if an employer not
providing any respirators, like Ho, resulted in only one violation,
while an employer who provided them but did not fit-test them
received per-employee citations.
28
Finally, the Secretary argues that even if the standards were
ambiguous, the Secretary’s per-employee construction was reasonable
and entitled to deference. That is, it sensibly conformed to the
purpose and wording of the regulations. See Martin v. OSHRC, 499
U.S. 144, 150-51 (1991). The Secretary contends the Commission
incorrectly failed to defer to the reasonableness of the
Secretary’s interpretation. The Commission claimed the Secretary
failed to raise it, but the Secretary responds she was not so
required because she was only defending Ho’s appeal of the ALJ’s
decision. And the Secretary notes Ho raised no deference
challenge. The Secretary argues the Commission could not choose
its own interpretation of the regulatory language where hers was
reasonable. See id. at 158. The Secretary maintains the
Commission also improperly concluded the Secretary’s decisions on
this issue had not been consistent and that in any event Ho did not
have fair notice that these standards could be assessed on a per-
employee basis. Moreover, the Secretary contends Ho had to
affirmatively plead and prove lack of fair notice, which claim he
did not even raise.
Ho Respondents agree with the Commission’s treatment of the
plain language of the respirator and training regulations. Ho
Respondents argue the Secretary’s position that she can choose to
issue citations on a per-employee basis as opposed to a per-
violation basis is not supported by the language of the standards.
29
Ho Respondents contend such plain language cannot be expanded under
the guise of interpretation. Ho Respondents stress the Commission
properly vacated the 20 citations that were entirely duplicative,
except as to the name of the worker involved. Ho Respondents rely
on Arcadian, 110 F.3d at 1193-94, 1196, as prohibiting the very
kind of per-employee citations and penalties the Secretary wants to
impose on them. Ho Respondents argue the language in the OSH Act
general duty clause at issue in Arcadian is substantially similar
to that in the respirator and training regulations at issue here.
Ho Respondents contend it is violative employer conduct or a
violative condition, as opposed to the number of employees, that is
the proper unit of prosecution. Ho Respondents also argue the
Secretary’s position is not to be accorded deference because the
regulations are unambiguous and thus applied not per employee, but
rather per violation. Even if the language were ambiguous, Ho
Respondents maintain the Secretary’s per-employee interpretation is
not reasonable because the Secretary used a punitive citation here
to publish her inconsistent interpretation of the standard. Ho
Respondents argue the Secretary’s per-employee citations are not in
accordance with law because they were beyond the scope of her
authority pursuant to the OSH Act and are not entitled to deference
because they were neither consistent with the language of the
standards nor consistently applied.
After reviewing the arguments advanced by the parties, we
30
agree with the Commission’s result that the training and respirator
citations cannot be imposed per employee here. As to the asbestos
respirator standard, we fully agree with the Commission’s
reasoning. However, as to the asbestos training standard, we
affirm the Commission’s result for different reasoning.
Asbestos training standard, 29 C.F.R. § 1926.1101(k)(9)(i) and
(viii).
To begin, we find this standard’s language ambiguous. Thus,
unlike the Commission, which found the standard to be stated solely
in inclusive terms, we agree with the Secretary that the language
of the asbestos training standard allows the Secretary, in her
discretion, to reasonably assess penalties on a per-employee basis.
Subpart (i) expressly refers to “a training program for all
employees” performing Class I asbestos work and also speaks to the
employer’s requirement to “ensure their participation in the
program,” which language tends to indicate that one training
program is to be provided for all employees as a unit and does not
appear to make allowance for a per-employee assessment. 29 C.F.R.
§ 1926.1101(k)(9)(i) (1997). However, although subpart (viii)
again refers to the singular “training program,” it also goes on to
state that the program “shall be conducted in a manner the employee
is able to understand” and that the employer “shall ensure that
each such employee is informed of the following.” Id. §
1926.1101(k)(9)(viii).
These express references to the ability of the employee to
31
understand and to “each such employee” being informed implicate the
possibility that on an individual basis, employees may need
distinct, discrete information not provided to “each such” other
employee, perhaps due to differences in experience, language, and
job skills. Although this Court has treated the reference to “each
of his employees” in the general duty clause of the OSH Act to be
entirely inclusive, this reading was made in the context of §
654(a)(1) being a “catchall provision” governing any recognized
hazards of the workplace not covered by a specific regulation.
Arcadian, 110 F.3d at 1196 (citation omitted). There is a
distinction when reading the specific asbestos training regulation,
which does not have a “principal focus on hazardous conditions”
such that “each” is only used to clarify that the employer’s duty
runs to all employees, “regardless of their individual
susceptibilities (i.e., age or pregnancy).” Id. at 1198.
In contrast, subpart (viii) of the asbestos training standard
instructs employers that the training program must be conducted in
such a way that the employees understand and are informed of
various asbestos-related hazards. See 29 C.F.R. §
1926.1101(k)(9)(viii) (1997). Whether an employee understands and
is informed by a training program, as the regulation requires, may
depend on his “individual susceptibilities.” See Arcadian, 110
F.3d at 1198. Thus, considering the interaction of the two
subparts (i) and (viii) of the asbestos training standard together,
32
we agree with the Secretary that § 1926.1101(k)(9) is ambiguous and
therefore can be interpreted to allow for citation on a per-
employee basis.
However, we find the Secretary’s discretionary decision to
cite Ho on a per-employee basis on these facts was unreasonable.
In Martin, the Supreme Court explained the division of powers
between the Secretary and the Commission under the OSH Act. 499
U.S. at 157-58. As a reviewing court, we “should defer to the
Secretary only if the Secretary’s interpretation is reasonable.”
Id. at 158 (emphasis in original). Thus, under Martin, after
determining that a standard is ambiguous, we must perform an
assessment of the reasonableness of the Secretary’s view to
determine whether we must defer to it over the Commission’s
competing interpretation in a particular case. Id. at 150, 159.
In this way, we are authorized by Congress to “protect regulated
parties from biased interpretations of the Secretary’s
regulations.” Id. at 156. “The Secretary’s interpretation of an
ambiguous standard is subject to the same standard of substantive
review as any other exercise of delegated lawmaking power.” Id. at
158 (citing 5 U.S.C. § 706(2)(A)). That is, the Secretary’s
interpretation is not reasonable, and this Court can hold it
unlawful and set it aside, if we find such interpretation to be
“arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law.” 5 U.S.C. § 706(2)(A) (1996).
33
We note first that this case does not present any employee-
specific unique circumstances that could merit citation based on
each failure to train an individual employee. See, e.g, Catapano,
1996 WL 559899, at *5 (vacating duplicative training citations
because of a lack of different circumstances). Here, the training
citations merely tracked the language of subpart (i), referring to
Ho as employer not instituting “a training program for all
employees,” and of subpart (viii), referring to Ho as employer not
ensuring his employees were informed of the items listed in subpart
(viii). There was no indication as to how one citation may have
been distinct from the next. Moreover, as in Arcadian, all the
cited violations were identical to each other, except for the name
of the hospital site worker. See 110 F.3d at 1194; see also
Catapano, 1996 WL 559899, at *5 (noting the citations were
identical, except for the date). But see also Arcadian, 110 F.3d
at 1198-99 (indicating in dictum that although “generally
unavailable,” “[a]n employee could be a unit of violation” “if the
regulated condition or practice is unique to the employee”).
Nothing in this record indicates that one training program
regarding this Class I asbestos removal at the hospital site would
not have abated the violation of both subparts (i) and (viii), nor
that unique individual training sessions, or even more than one
session, would have been necessary to abate the violation. The ALJ
indicated that one training session, if all 11 workers had
34
attended, would have been sufficient to meet the training standard
here. The citations and evidence support that this was one Class
I asbestos removal job on a single site at one address, performed
by all the same 11 untrained workers, from the beginning to the
end. Thus, although we acknowledge that there may be cases where
per-employee citations of § 1926.1101(k)(9) based on unique
circumstances of the employees might be considered reasonable, here
we do not defer to the Secretary’s unreasonable interpretation of
the asbestos training regulation as applied to Ho. As the
Commission’s interpretation of the standard here was reasonable as
applied to Ho’s case, we affirm its assessment of one citation
instead of 11 individual citations.
Asbestos respirator standard, 29 C.F.R. § 1926.1101(h)(1)(i).
Unlike the asbestos training standard, we read the plain
language of the portion of the respirator standard for which Ho was
cited as not allowing the Secretary the discretion to charge
employers with per-employee citations. The regulation states:
“The employer shall provide respirators, and ensure that they are
used . . . [d]uring all Class I asbestos jobs.” 29 C.F.R. §
1926.1101(h)(1)(i) (1997). The Secretary makes the seemingly
logical argument that it makes little sense for a malicious
employer who provides no respirators at all to be eligible for
fewer violations than an employer who in good faith provides
respirators but fails to comply with other subparts of the asbestos
respirator standard governing the employee’s ability to choose his
35
type of respirator and periodic fit-testing requirements. However,
there is simply no language in the general respiratory protection
section that suggests the unit of prosecution could be based on
each individual employee not receiving a respirator versus the
employer’s course of action in failing to provide respirators to
his employees as a whole for the Class I asbestos job. Instead, we
read the unit of prosecution for violating this standard as
applying per Class I asbestos job. See Hartford Roofing, 1995 WL
555498, at *5 (“[W]here a single practice, method or condition
affects multiple employees, there can only be one violation of the
standard.”). Here, the evidence indicates that Ho engaged in one
Class I asbestos removal job at one hospital site for one sustained
period of time.
In contrast, language in other parts of the asbestos
respirator standard suggests citation on a per-employee basis might
be appropriate. Subsection (h)(2)(iii) of the asbestos respirator
standard contains language directing employers to provide an air-
purifying respirator instead of a negative-pressure respirator to
employees, but only when “[a]n employee chooses to use this type of
respirator.” 29 C.F.R. § 1926.1101(h)(2)(iii)(A)(1).10 A violation
10
Section 1926.1101, Asbestos, provides, in part:
(h) Respiratory protection.
. . .
(2) Respirator selection.
. . .
(iii)(A) The employer shall provide a tight fitting powered,
36
could be counted each time the employer did not provide the chosen
type of respirator to the individual employee who requested it.
Likewise, subsection (h)(4)(i) mandates the employer to “ensure
that the respirator issued to the employee exhibits the least
possible faceplate leakage and that the respirator is fitted
properly.” Id. § 1926.1101(h)(4)(i).11 This language properly
applies to the unique circumstances of an individual employee; a
violation could be counted as to each employee whose faceplate
exhibited more than the least possible leakage and was not properly
fitted at the time of issuance. Violations of subsection
(h)(4)(ii) mandating qualitative or quantitative fit-tests to be
performed at the initial fitting and every six months afterward
also could be appropriately assessed for each employee who did not
receive such periodic testing.12 Indeed, an employer potentially
air-purifying respirator in lieu of any negative-pressure
respirator specified in Table 1 whenever:
(1) An employee chooses to use this type of respirator . . .
.
29 C.F.R. § 1926.1101(h)(2)(iii)(A)(1) (1997).
11
Section 1926.1101, Asbestos, provides, in part:
(h) Respiratory protection.
. . .
(4) Respirator fit testing.
(i) The employer shall ensure that the respirator issued to
the employee exhibits the least possible facepiece leakage and
that the respirator is fitted properly.
29 C.F.R. § 1926.1101(h)(4)(i) (1997).
12
Section 1926.1101, Asbestos, provides, in part:
37
could be cited multiple times per employee under subpart (ii) if
multiple semiannual periods passed without the required fit-
testing. Thus, while the latter subsections of the asbestos
respirator standard require employee-specific action by the
employer, none of the above employee-specific language is
implicated in subsection (h)(1)(i) governing general provision of
respirators to Class I asbestos workers. This general subsection
plainly addresses employees in the aggregate.
While we agree with the Secretary that in dicta in Arcadian we
stated that per-employee citation may be appropriate in certain
cases “only if the regulated condition or practice was unique to
the individual,” 110 F.3d at 1198-99, again, the precise issue
there was neither the asbestos respirator standard nor any
respirator standard at all. As for the Secretary’s reliance on
(h) Respiratory protection.
. . .
(4) Respirator fit testing.
. . .
(ii) Employers shall perform either quantitative or
qualitative face fit tests at the time of initial fitting and
at least every 6 months thereafter for each employee wearing
a negative-pressure respirator. The qualitative fit tests may
be used only for testing the fit of half-mask respirators
where they are permitted to be worn, or of full-facepiece air
purifying respirators where they are worn at levels at which
half-facepiece air purifying respirators are permitted.
Qualitative and quantitative fit tests shall be conducted in
accordance with Appendix C to this section. The tests shall be
used to select facepieces that provide the required protection
as prescribed in Table 1 in paragraph (h)(2)(i) of this
section.
29 C.F.R. § 1926.1101(h)(4)(ii) (1997).
38
Sanders Lead, there the Commission interpreted not the section of
the lead respirator standard governing general provision of
respirators to employees, see 29 C.F.R. § 1910.1025(f)(1),13 but
rather the fit-testing subsection, 29 C.F.R. §
1926.1025(f)(3)(ii).14 1995 WL 242606, at *6. “[T]he respirator
fit-test standard requires the evaluation of individual employees’
respirators under certain unique circumstances peculiar to each
employee.” Id. As we indicated above, the fit-test portion of the
asbestos respirator standard similarly provides for per-employee
assessment of violations. See 29 C.F.R. § 1926.1101(h)(4)(ii).
Finally, in Hartford Roofing, although the Commission indicated
there may be per-employee assessment of violations of the
respiratory protection standard, 29 C.F.R. § 1910.134, such
statement was made in dicta, as the precise issue was whether the
Secretary could cite a separate violation of 29 C.F.R. §
1926.500(g)(1)(i)15 and § 1926.500(g)(4)16 for each employee exposed
13
Section 1910.1025, Lead, provides, in part:
(f) Respiratory protection.
(1) General. Where the use of respirators is required under
this section, the employer shall provide, at no cost to the
employee, and assure the use of respirators which comply with
the requirements of this paragraph. Respirators shall be used
in the following circumstances . . . .
29 C.F.R. § 1910.1025(f)(1) (1986).
14
See n.7.
15
Section 1926.500, Guardrails, handrails, and covers, provides,
in part:
39
to an unguarded roof edge. 1995 WL 555498, at *6-7, *10 (affirming
the ALJ’s assessment of one citation where the Secretary had issued
one for each of six employees). Moreover, the respiratory standard
mentioned in Hartford Roofing related not to asbestos or lead, but
rather to general industry, shipyards, marine terminals,
longshoring, and construction. See 29 C.F.R. § 1910.134 (1992).
In those work zones, widespread use of respirators is not required,
but rather depends on the precise atmospheric conditions, when it
becomes necessary to protect the employees’ health. See id.
After considering the plain language of subsection (h)(1)(i)
(g) Guarding of low-pitched roof perimeters during the
performance of built-up roofing work.
(1) General provisions. During the performance of built-up
roofing work on low-pitched roofs with a ground to eave height
greater than 16 feet (4.9 meters), employees engaged in such
work shall be protected from falling from all unprotected
sides and edges of the roof as follows:
(i) By the use of a motion-stopping-safety system (MSS system)
. . . .
29 C.F.R. § 1926.500(g)(1)(i) (1992).
16
Section 1926.500, Guardrails, handrails, and covers, provides,
in part:
(g) Guarding of low-pitched roof perimeters during the
performance of built-up roofing work.
. . .
(4) Mechanical equipment. Mechanical equipment may be used or
stored only in areas where employees are being protected by
either a warning line or an MSS system. Mechanical equipment
may not be used or stored between the warning line and the
roof edge unless the employees are being protected by an MSS
system. Mechanical equipment may not be used or stored where
the only protection provided is by a safety monitoring system.
29 C.F.R. § 1926.500(g)(4) (1992).
40
of the asbestos respirator standard, we agree with the Commission
and find that the regulation does not provide for the assessment of
citations on a per-employee basis, but rather on the basis of an
employer’s course of conduct in failing to provide respirators to
his employees during a Class I asbestos job. Thus, Ho’s failure to
provide respirators to all 11 workers at the hospital site for the
single Class I asbestos removal project was a single violation of
the respirator regulation. Therefore, we affirm the Commission’s
assessment of one violation of § 1926.1101(h)(1)(i).17
Whether the Commission abused its discretion in imposing the
maximum penalties for Ho’s OSH Act violations.
The Commission has the exclusive authority to assess penalties
once a proposed penalty is contested. Arcadian, 110 F.3d at 1199.
Section 17(j) of the OSH Act, 29 U.S.C. § 666(j), guides the
Commission’s assessment of a penalty. Id.; J.A. Jones, 1993 WL
61950, at *15. The Commission is to “giv[e] due consideration to
the appropriateness of the penalty with respect to [1] the size of
the business of the employer being charged, [2] the gravity of the
violation, [3] the good faith of the employer, and [4] the history
of previous violations.” 29 U.S.C. § 666(j) (1990). “These
factors are not necessarily accorded equal weight . . . .” J.A.
17
We pause to note that the instant result does not foreclose the
possibility of a different result if an employer refuses to provide
respirators to his employees for multiple and distinct Class I
asbestos jobs; then each of those violations could be separately
cited by the Secretary.
41
Jones, 1993 WL 61950, at *15. Gravity of violation is the key
factor. See id. The Commission can, when appropriate, consider
the number of employees exposed to the condition when analyzing
gravity. Arcadian, 110 F.3d at 1199. This Court reviews the
Commission’s determination of the amount of an OSH Act penalty for
abuse of discretion. Shaw Constr., Inc. v. OSHRC, 534 F.2d 1183,
1185 (5th Cir. 1976).
Ho Respondents argue that the Commission abused its discretion
in failing to consider each of the four elements set forth in §
666(j) in its determination of the amounts of penalties to assess.
Ho Respondents maintain it was an abuse of discretion to consider
Ho’s bad faith alone because all four factors are equally
important.
The Secretary responds that the Commission did not err in
assessing the maximum penalty for the two violations of the
asbestos training and respirator standards it affirmed. The
Secretary argues the Commission gave proper consideration to the
statutory penalty criteria but concluded that Ho’s extreme and
appalling disregard for employee safety – his lack of good faith –
outweighed other considerations in the context of this case.
After vacating 20 of the 22 asbestos training and respirator
standard citations, the Commission increased the remaining willful
penalties to the maximum $70,000 each and the serious penalties to
the maximum $7000 each to make a strong statement about Ho’s
42
illegal behavior. To be sure, the Commission rested much of its
decision on Ho’s lack of good faith. The Commission also, however,
addressed the gravity of Ho’s violations; it considered the number
of employees he exposed to the cited conditions to be a significant
indication of gravity. While this inquiry is a factor-based
balancing test, there is no requirement of equal consideration of
all factors. See J.A. Jones, 1993 WL 61950, at *15. The
Commission expressly considered and weighed Ho’s lack of good faith
and the gravity of the violations. Based on the circumstances
present in Ho’s particular case, we find the Commission did not
abuse its discretion in assessing the maximum penalty amounts.
CONCLUSION
Having carefully considered the record of the case and the
parties’ respective briefing and arguments, for the reasons set
forth above, we AFFIRM the Commission’s decision.
AFFIRMED.
43
EMILIO M. GARZA, Circuit Judge, dissenting:
Because the majority opinion fails to defer to the Secretary
of Labor’s (“Secretary”) reasonable interpretations of the
ambiguous language of 29 C.F.R. § 1926.1101(h)(1) and 29 C.F.R. §
1926.1101(k)(9); incorrectly finds that the Ho Ho Ho Express and
Houston Fruitland (collectively, “Ho Entities”) are not Erik Ho’s
(“Ho”) alter egos; and holds that Ho’s instruction to tap an
unmarked pipe was a “serious” rather than “willful” violation of
the General Duty Clause, 29 U.S.C. § 654(a)(1), I respectfully
dissent.
I
The majority opinion holds that the language of 29 C.F.R. §
1926.1101(h)(1) unambiguously precludes per-employee citations and,
thus, affirmed the Commission’s ruling that the regulation does not
require an individualized duty but instead applies to a single
course of conduct. The majority opinion also finds that the
language of 29 C.F.R. § 1926.1101(k)(9)))which the Commission
determined addresses a single course of conduct, prohibiting per-
employee citations))is ambiguous; however, it holds that the
Secretary’s interpretation is unreasonable and, hence, that the
per-employee citations are prohibited. I disagree. The language
of both provisions is ambiguous, and the majority opinion fails to
defer to the Secretary’s reasonable interpretation allowing per-
employee citations.
The penalty provisions of the OSH Act permit penalties on a
per-violation basis. Kaspar Wire Works, Inc. v. Sec’y of Labor,
268 F.3d 1123, 1130 (D.C. Cir. 2001). The question, however, is
what constitutes a unit of violation. “The test of whether the Act
and the cited regulation permits multiple or single units of
prosecution is whether they prohibit individual acts, or a single
course of action.” Sec’y of Labor v. Caterpillar Inc., No.
87-0922, 1993 WL 44416, at *22 (O.S.H.R.C. Feb. 5, 1993). An
example of a single course of action is the failure to protect the
perimeter of a roof. Sec’y of Labor v. Hartford Roofing Co., No.
92-3855, 1995 WL 555498 (O.S.H.R.C. Sept. 15, 1995). The failure
to erect guardrails on multiple scaffolds, however, may be cited on
a per-instance basis. Sec’y of Labor v. Hoffman Constr. Co., No.
4182, 1978 WL 6990 (O.S.H.R.C. Jan. 4, 1978). Individual record-
keeping violations may be penalized on a per-instance basis.
Caterpillar, 1993 WL 44416, at *23. Failure to remove employees
from work who were exposed to lead at or above the action level may
be cited on a per-employee basis. Sec’y of Labor v. Sanders Lead
Co., No. 87-260, 1995 WL 242606, at *3 (O.S.H.R.C. Apr. 24, 1995).
“It is not the single decision by an employer . . ., but the
language of the standard that is determinative.” Id.
When the statutory language is not clear, “the Secretary’s
interpretation would be entitled to deference given her official
duty, specialized expertise, investigatory knowledge and other
-45-
experience relevant to carrying out the purposes of the Act.”
Kaspar Wire Works, Inc., 268 F.3d at 1131. “In situations in which
the meaning of [regulatory] language is not free from doubt, the
reviewing court should give effect to the [Secretary’s]
interpretation so long as it is reasonable, that is, so long as the
interpretation sensibly conforms to the purpose and wording of the
regulations.” Martin v. OSHRC, 499 U.S. 144, 150 (1991) (internal
quotations and citations omitted). This deference is given to the
Secretary, not the Commission. Id. at 158 (“although we hold that
a reviewing court may not prefer the reasonable interpretation of
the Commission to the reasonable interpretations of the Secretary,
we emphasize that the reviewing court should defer to the Secretary
only if the Secretary’s interpretation is reasonable”) (emphasis in
original). Thus, the inquiry is in two parts: (1) whether the
language is ambiguous; and (2) whether the Secretary’s
interpretation is reasonable. If so, we must defer to that
interpretation.
A
At the time of the violations, 29 C.F.R. § 1926.1101(h)(1)
stated, “[t]he employer shall provide respirators, and ensure that
they are used . . . .” The majority opinion finds that this
language unambiguously precludes per-employee citations. The
majority finds that, “there is simply no language in the general
respirator protection section that suggests the unit of prosecution
could be based on each individual employee not receiving a
-46-
respirator versus the employer’s course of action in failing to
provide respirators to his employees as a whole for the Class I
asbestos job.” (emphasis added). However, there is also no
language in the general respirator section that suggests the
section is violated only when the employer does not provide
respirators to “employees as a whole.”18 The majority’s reading
also does not comport with the explicit purpose of OSH Act, which
is “to assure so far as possible every working man and woman in the
Nation safe and healthful working conditions. . .” 29 § U.S.C.
651(b) (emphasis added); Chao v. Mallard Bay Drilling, 534 U.S.
235, 245 n.9 (2002). The use of the singular “man” and “woman”
suggests a focus on the individual employee. Since the plain
language does not specify whether per-employee citations are
permitted, the language is ambiguous.
The next step in the inquiry is whether the Secretary’s
interpretation is reasonable. It is irrelevant whether the
Commission’s interpretation is also reasonable as the discretion is
in the Secretary’s hands. Martin, 499 U.S. at 158.
It is a reasonable interpretation of 29 C.F.R. §
1926.1101(h)(1) to issue per-employee citations. “As long as
employees are working in a contaminated environment, the failure to
provide each of them with appropriate respirators could constitute
a separate and discrete violations [sic].” Hartford Roofing Co.,
18
Such an aggregate reading of 29 C.F.R. § 1926.1101(h)(1) could
be read to mean that when an employer provides most))but not all))of
its employees with respirators, it is still not in violation of the
general respirator protection section.
-47-
1995 WL 555498, at *7. Thus, Hartford makes the distinction
between the individual act of removing contaminates from the air
and the multiple acts of providing respirators. Id. The former is
subject to a single citation while the latter is subject to
multiple citations. Providing one employee with a respirator does
not abate the violation for other employees. Id. The requirement
also states that the employer shall “ensure that [the respirators]
are used.” 29 C.F.R. § 1926.1101(h)(1). Obviously, ensuring
individual usage requires action on a per-employee basis.
The subsections of 29 C.F.R. § 1926.1101(h)(1) also suggest
the potential for per-employee citations (or, at the very least,
suggest the absurdity of precluding per-employee citations for the
general respirator protection section). For instance, employers
are required to perform periodic individual face fittings for the
respirators. 29 C.F.R. § 1926.1101(h)(4). In addition, employers
are required to provide specific types of respirators depending on
employee requests. 29 C.F.R. § 1926.1101(h)(4). These
requirements are clearly employee specific. The employer cannot
provide any respirator; it must conform to the subsections of 29
C.F.R. § 1926.1101(h)(1) in providing employee specific
respirators. Thus, the Secretary reasonably interpreted the
ambiguous language of 29 C.F.R. § 1926.1101(h)(1) and we must defer
to her interpretation.
B
Section 1926.1101(k)(9)(i) states, “[t]he employer shall, at
no cost to the employee, institute a training program for all
-48-
employees . . ., and shall ensure their participation in the
program.” Section 1926.1101(k)(9)(viii) states, “[t]he training
program shall be conducted in a manner that the employee is able to
understand.” The majority opinion finds that, while the language
is ambiguous, the Secretary’s interpretation))allowing per-employee
citations))is unreasonable. The majority opinion reasons that one
training program could have abated the violation if all eleven
employees had attended and understood. Ho, of course, did not
conduct a training program for any of his employees. While the
majority provides a reasonable interpretation of the training
requirement, it fails to show how the Secretary’s interpretation is
unreasonable.
The majority opinion relies on Sec’y of Labor v. Andrew
Catapano Enters., Inc., Nos. 90-0050, 90-0189, 90-0190, 90-0191,
90-0192, 90-0193, 90-0771, 90-0772, 91-0026, 1996 WL 559899
(O.S.H.R.C. Sept. 30, 1996) for the proposition that only
“employee-specific unique circumstances” merit citations “based on
each failure to train an individual employee.” This reading
misstates the holding in Catapano. The Commission in Catapano
found “[t]he language of the standard))‘[t]he employer shall
instruct each employee’))clearly may be read to permit the
Secretary to cite separate violations based on the failures to
train individual employees.” Id. at *5. The Commission did not
vacate the multiple citations on a per-employee basis but on a per-
inspection basis. The Commission reasoned that each new inspection
-49-
could not result in a separate citation when “the employees did not
change, and the working conditions and applicable regulations did
not change.” Id.
Even the majority’s “employee-specific unique circumstances”
standard is met by the failure to train employees and ensure that
the employees understand the training. Reich v. Arcadian Corp.,
110 F.3d 1192, 1198-99 (5th Cir. 1997) (“An employee could be a
unit of violation, however, only if the regulated condition or
practice is unique to the employee (i.e., failure to train or
remove a worker).”). While the single action of a group training
session could have instructed the eleven workers at once, ensuring
that each employee understood the training is employee specific.
Thus, the majority has failed to show how the Secretary’s
interpretation is unreasonable. Accordingly, I would reverse the
Commission’s determination that per-employee citations are
prohibited.
II
The majority opinion affirms the Commission’s finding that the
Ho Entities are not alter egos of Ho because they “maintained
separate corporate identities, tax identities, bank accounts, and
legitimate business operations.” In determining whether a
corporation is an alter ego of an individual for reverse corporate
piercing purposes, courts consider the totality of the
circumstances, including “the total dealings of the corporation and
the individual, the amount of financial interest the individual has
in the corporation, the ownership and the control that the
-50-
individual maintains over the corporation, and whether the
corporation has been used for personal purposes.” Estate of Lisle
v. Comm’r of Internal Revenue, 341 F.3d 364, 375-76 (5th Cir.
2003).
Courts need to look beyond formalities and records to
determine the true economic relationship between the entities.
United States v. Jon-T Chems., Inc. 768 F.2d 686, 693 (5th Cir.
1985) (finding that “the courts are concerned with reality and not
form, with how the corporation operated and the individual
defendant’s relationship to that operation”). In Jon-T Chemicals,
the court dismissed the formality of recording paid expenses as
loans because “whenever [one company] could not pay its bills, [the
other company] did so by writing a check.” Id. at 695. The
companies shared an accounting department and “funds were
transferred between the different [companies’] accounts in order to
cover deficiencies.” Id. That is precisely what happened here.
The Ho Entities shared one bookkeeper who notified Ho when one
account was deficient; Ho would then transfer the funds to cover
the deficiency of the other company.
The evidence shows that Ho has complete control over the Ho
Entities. Ho owns two-thirds of the stock and is president of both
companies. The Ho Entities advanced the vast majority of Ho’s
personal investment of the property.19 In addition, the Ho Entities
19
An undisclosed “outside source” and two other corporations,
one of which Ho owns, contributed the rest. These sources are not
involved in the OSHA proceedings.
-51-
provided funds for the workers’ wages and for supplies and
equipment. Converting a hospital into residential units has
nothing to do with the Ho Entities’ business purposes of
transportation and fruit sales. While the frequent transfers among
the Ho Entities and Ho were documented as debts, there were no loan
documents, no interest due, no schedule for repayment and no
representation of debt repayment. Accordingly, I believe that
substantial evidence supports a finding that the Ho Entities were
Ho’s alter egos and, thus, would vacate the Commission’s order
vacating the citations against the Ho Entities.
III
The majority opinion affirmed the Commission’s finding that
the violation of the General Duty Clause was “serious” instead of
“willful,” reasoning that there was no evidence compelling a
willful finding for the specific instruction to tap the unmarked
valve. The Commission’s legal conclusions may be set aside if they
are arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law. Mica Corp. v. OSHRC, 295 F.3d 442, 447
(5th Cir. 2002). The General Duty Clause of the OSH Act requires
an employer to provide “each of his employees employment and a
place of employment which are free from recognized hazards that are
causing or are likely to cause death or serious physical harm to
his employees.” 29 U.S.C. § 654(a)(1).
“A violation is willful if it is committed with intentional,
knowing or voluntary disregard for the requirements of the
Occupational Safety and Health Act.” Hartford Roofing Co., 1995 WL
-52-
555498, at *2. See also AJP Constr., Inc. v. Sec’y of Labor, 357
F.3d 70, 74 (D.C. Cir. 2004) (finding that “a willful violation of
the Act constitutes an act done voluntarily with either an
intentional disregard of, or plain indifference to, the Act’s
requirements”). Ho conceded that tapping into an unmarked pipe at
a demolition site was a “recognized hazard.” Instructing his
employees to tap an unmarked pipe))a “recognized hazard”)) evidences
a plain indifference to the General Duty Clause. Even without the
benefit of hindsight, it is self-evident that tapping an unmarked
pipe is “likely to cause death or serious physical harm.”
Therefore, the Commission abused its discretion by finding Ho’s
violation of the General Duty Clause “serious” instead of
“willful.” Accordingly, I would vacate the Commission’s order
reducing the General Duty Clause violation to serious from willful.
For the above stated reasons, I respectfully dissent.
-53-
Chao v. Occupational Safety & Health Review Commission
Court: Court of Appeals for the Fifth Circuit
Date filed: 2005-02-21
Citations: 401 F.3d 355
Copy Citations