United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 3, 1998 Decided April 9, 1999
No. 98-1036
Chamber of Commerce of the United States,
National Association of Manufacturers, American Trucking
Associations, Inc.,
and Food Marketing Institute,
Petitioners
v.
United States Department of Labor,
Occupational Safety & Health Administration, and
Alexis M. Herman, Secretary,
United States Department of Labor,
Respondents
Food Distributors International, et al.,
Intervenors
On Petition for Review of an Order of the
Occupational Safety and Health Administration
Baruch A. Fellner argued the cause for petitioners. With
him on the briefs were William J. Kilberg, Eugene Scalia,
Stephen A. Bokat, Janice S. Amundson, Daniel R. Barney,
Lynda S. Mounts, George Green, and Peter A. Susser.
Bruce Justh, Assistant Counsel for Appellate Litigation,
U.S. Department of Labor, argued the cause for respondents.
With him on the brief were Joseph M. Woodward, Associate
Solicitor for Occupational Safety and Health, and Barbara
Werthmann, Counsel for Appellate Litigation.
Before: Silberman, Ginsburg and Sentelle, Circuit
Judges.
Opinion for the Court filed by Circuit Judge Ginsburg.
Dissenting opinion filed by Circuit Judge Silberman.
Ginsburg, Circuit Judge: The Occupational Safety and
Health Administration, part of the United States Department
of Labor, issued a "Directive" pursuant to which each employ-
er in selected industries will be inspected unless it adopts a
comprehensive safety and health program designed to meet
standards that in some respects exceed those required by law.
The Chamber of Commerce objects to the Directive on the
grounds that prior notice and an opportunity to comment
were required by the Administrative Procedure Act, and that
the envisioned inspections will violate the Fourth Amendment
to the Constitution of the United States. Because we agree
with the Chamber that the agency issued the Directive in
violation of the APA, we do not reach the constitutional issue.
I. Background
According to the OSHA, the Directive, which establishes
the "OSHA High Injury/Illness Rate Targeting and Coopera-
tive Compliance Program," represents a new, cooperative
approach to the problem of worker safety at some 12,500
relatively dangerous workplaces. The Directive first provides
that each of these sites will be placed on a so-called "primary
inspection list" and subjected to a comprehensive inspection
before the end of 1999. (But for the Directive, the OSHA
might have searched some of the sites, but it does not claim
that it would have searched all of them). The Directive next
provides that the agency will remove a workplace from the
primary inspection list, and reduce by 70 to 90 percent the
probability that it will be inspected, if the employer partici-
pates in the agency's "Cooperative Compliance Program."
Participation in the CCP obligates the employer to satisfy
eight requirements. An employer must agree, for example,
to "[i]dentify and correct hazards" and to "[w]ork toward a
significant reduction of injuries and illnesses." Most impor-
tant is the requirement that the employer implement a "com-
prehensive safety and health program" (CSHP) that meets
the standard established in the OSHA's 1989 Safety and
Health Program Management Guidelines.
The Directive spells out what is entailed. Most of the
requirements are procedural. A CSHP, for example, should
include regular, employer-conducted inspections of the work-
place, investigations of "near-miss" incidents, and a means by
which employees can complain of unsafe practices and cir-
cumstances without fear of reprisal. An adequate CSHP
should also, however, address specific substantive problems
associated with "ergonomics, materials handling, bloodborne
pathogens, confined space, [and] hazard communication." Al-
though many aspects of a CSHP are, not surprisingly, direct-
ed toward the prevention or correction of violations of the
Occupational Safety and Health Act, 29 U.S.C. ss 651-678,
the Directive makes clear that compliance with the Act is not
in itself sufficient for participation in the new CCP: "An
effective [CSHP] looks beyond specific requirements of law to
address all hazards. It will seek to prevent injuries and
illnesses, whether or not compliance is at issue." Further to
this point, an acceptable CSHP also obligates the employer to
be generally in compliance with applicable "voluntary stan-
dards," "industry practices," and even "suppliers' safety rec-
ommendations."
II. Analysis
The Chamber of Commerce petitions for review of the
Directive first on the ground that the agency should have
conducted a notice and comment rulemaking proceeding prior
to issuing it. Before considering the Chamber's argument,
however, we must consider the agency's objection that the
case is not within the jurisdiction of this court.
A.Jurisdiction
Under the OSH Act, 29 U.S.C. s 655(f), this court has
jurisdiction to review a "standard" issued by the OSHA. An
OSHA "regulation," however, is subject to review in the
district court, pursuant to the Administrative Procedure Act,
5 U.S.C. s 703. See Workplace Health & Safety Council v.
Reich, 56 F.3d 1465, 1467 (D.C. Cir. 1995). The OSH Act
does not define the term "regulation," but describes a "stan-
dard" as a rule that "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." 29 U.S.C. s 652(8). The
question whether a rule is a "standard," so defined, is to be
answered with reference to its "basic function ... rather than
the exact nature of the 'practices, means, methods, operations
or processes' ... it embodies." Workplace Health, 56 F.3d at
1468 (quoting Louisiana Chemical Ass'n v. Bingham, 657
F.2d 777, 781 (5th Cir. 1981)). If the basic function of the
rule is to "address[ ] ... a specific and already identified
hazard, [and it is] not a purely administrative effort designed
to uncover violations of the Act," then the rule is a standard.
Id. (quoting Louisiana Chemical, 657 F.2d at 782). If, on the
other hand, the rule is "merely a general enforcement or
detection procedure," then it is a regulation. Id. In other
words, a standard, unlike a regulation, is "aim[ed] toward
correction rather than mere inquiry into possible hazards."
Id. (quoting Louisiana Chemical, 657 F.2d at 782).
The OSHA argues that the Directive here at issue must be
considered a regulation for two reasons. First, it lacks some
of the formal attributes of the typical standard. In particu-
lar, according to the agency, an employer's participation in
the CCP is strictly voluntary; the Directive is not backed by
the threat of a legal sanction, and it does not preempt any
regulation imposed by a state. Second, we are told, the
Directive cannot be a standard because it does not address a
"specific and already identified hazard."
Although the proper characterization of the Directive is not
without difficulty, we do not think either argument that it is a
regulation rather than a standard withstands scrutiny. As to
the first, it is true that the Directive does not formally
require anything: An employer is not subject to a legal
penalty for failing to join the CCP; it will be subject only to a
safety inspection for its recalcitrance. Our concern, however,
is with the practical effect (the "basic function") of the rule,
not its formal characteristics. 56 F.3d at 1468. The Cham-
ber of Commerce asserts, and the agency does not deny, that
as a practical matter being subjected to a safety inspection
can be quite as onerous for an employer as paying a fine
imposed by the OSHA. See Cerro Metal Prods. v. Marshall,
620 F.2d 964, 974 (3d Cir. 1980) (comprehensive OSHA "[i]n-
spections ... frequently extend over several weeks. They
necessarily create inconvenience to the employer and a cer-
tain amount of lost time for employees who escort the inspec-
tor or are otherwise disrupted in their work").* Indeed, one
of the agency's objectives, as stated in the Directive, is to
"leverage limited OSHA resources" by encouraging employ-
ers to adopt a "comprehensive safety and health program."
This can only mean that the agency is intentionally using the
leverage it has by virtue solely of its power to inspect. The
Directive is therefore the practical equivalent of a rule that
obliges an employer to comply or to suffer the consequences;
the voluntary form of the rule is but a veil for the threat it
obscures. For the same reason, it is of no great moment that
the Directive purports not to preempt state law, although that
is undoubtedly a point of difference between it and a formal
OSHA standard. The distinction is not germane to our
inquiry because the failure to preempt does not make the
Directive, as a practical matter, any more or less a rule that
__________
* For this reason, we also reject the OSHA's separate argument
that the Chamber does not have standing to sue because, absent a
legal penalty for non-participation, employers suffer no cognizable
injury.
"requires conditions ... necessary ... to provide safe or
healthful employment."
The OSHA's second argument is that the Directive does
not fit squarely within the definition of the term "standard"
that we accepted from the Fifth Circuit in Workplace Health:
Insofar, that is, as the Directive is intended to encourage the
spread of safety programs that address "all hazards" in the
workplace, the OSHA argues it is not a "remedial measure
addressed to a specific and already identified hazard." 56
F.3d at 1468. That the Directive must therefore be deemed a
regulation, however, does not follow. While the Directive fits
the definition of a standard only imperfectly, it fits the
definition of a regulation not at all. The Directive is clearly
not, for example, "a purely administrative effort designed to
uncover violations of the Act." By its terms, it aims to foster
safety policies more stringent than any required by the Act or
by the regulations implementing the Act, including, as we
have seen, "voluntary standards," "industry practices," and
"suppliers' safety standards." Cf. id. ("[S]tandards should
aim toward correction rather than mere inquiry into possible
hazards"). Nor, in view of the Directive's stated goal of
correcting, rather than merely uncovering, specific dangers in
the workplace, including hazards not covered by any OSHA
standard, can it be described as "merely an enforcement or
detection procedure designed to further the goals of the Act
generally."
In any event, we doubt that the "specific and already
identified hazard" criterion can bear the weight the OSHA
would place upon it. The phrase was not integral to the
outcome reached in either Workplace Health or Louisiana
Chemical. The rules held to be regulations in those cases
were procedural; they did not directly address any hazard,
specific or otherwise, identified or not. See Workplace
Health, 56 F.3d at 1466 (rule requiring employers to report
work-related deaths and hospitalizations); Louisiana Chemi-
cal, 657 F.2d at 778-79 (rule requiring employers to make
available records of employees' exposure to toxic substances).
In fact, Louisiana Chemical suggests that the specificity of
the hazard a rule aims to correct is not as important as
whether the basic function of the rule is substantive. That a
rule is directed toward a particular danger, rather than
danger in general, may be relevant to whether it qualifies as a
standard; it is not, however, dispositive. See id. at 783 n.9
("Our problem with calling the Records Access rule a stan-
dard lies not so much in the number [of hazards it addresses]
as with our perception of its basic function: enforcement and
detection. Lack of particularity is merely one aspect of this
function").
In sum, we are forced by the jurisdictional structure and
form of the OSH Act to characterize the Directive either as a
"standard" or as a "regulation." Although neither moniker is
entirely apt, we conclude that the Directive is a "standard"
within the meaning of s 652(8) because it effectively obligates
employers, under penalty of certain inspection, to adopt a
CSHP, and thereby imposes upon employers new safety
standards more demanding than those required by the Act or
by any pre-existing regulation implementing the Act. And
because the Directive is a standard, we have jurisdiction
under s 655(f) to consider the Chamber's petition to review it.
B.Notice and Comment
Under the APA, 5 U.S.C. s 553, an agency seeking to
promulgate a rule must first provide the public with notice of,
and an opportunity to comment upon, a proposed version of
it. The OSHA concedes that the Directive is, in APA par-
lance, a "rule," and therefore that s 553 applies. See United
States Dep't of Labor v. Kast Metals Corp., 744 F.2d 1145,
1149-51 (5th Cir. 1984) (agency inspection plan is a rule for
purposes of s 553). The agency takes the position, however,
that notice and comment rulemaking was not required be-
cause the Directive falls into the exceptions provided in
s 553(b)(3)(A) for "rules of agency ... procedure" and "gen-
eral statements of policy."
1.Procedural rule
A procedural rule is one that does not itself "alter the
rights or interests of parties, although it may alter the
manner in which the parties present themselves or their
viewpoints to the agency." Batterton v. Marshall, 648 F.2d
694, 707 (D.C. Cir. 1980). A substantive rule, in contrast, has
a "substantial impact" upon private parties and "puts a stamp
of [agency] approval or disapproval on a given type of behav-
ior." American Hosp. Ass'n v. Bowen, 834 F.2d 1037, 1047
(D.C. Cir. 1987). This distinction is often difficult to apply, as
even a purely procedural rule can affect the substantive
outcome of an agency proceeding. See JEM Broad. Co. v.
FCC, 22 F.3d 320, 326 (D.C. Cir. 1994). Because of this
difficulty, we apply s 553(b)(3)(A) with an eye toward balanc-
ing the need for public participation in agency decisionmaking
with the agency's competing interest in "retain[ing] latitude
in organizing [its] internal operations." Batterton, 648 F.2d
at 707.
In defense of its position that the Directive is a procedural
rule, the OSHA advances two arguments. First, minimizing
the significance of the CCP, it asserts that the Directive is
merely an inspection plan that does not put its "stamp of
approval or disapproval" on any particular behavior. Then,
ignoring the inspection plan, it maintains that the Directive
has no "substantial impact" upon covered employers because
of the voluntary nature of the CCP. But the inspection plan
and the CCP are two elements of the same rule; in determin-
ing whether notice and comment were required before it
could be promulgated, we must view the rule as a whole.
So viewed, it is apparent that the Directive cannot be
considered procedural. If the function of the CCP were
simply to provide each employer with the option of substitut-
ing self-inspection for an equivalent inspection conducted by
the OSHA, then the agency could make a creditable argu-
ment that the Directive does not represent the kind of
normative judgment characteristic of a substantive rule. See
Guardian Fed. Savings & Loan Ass'n v. FSLIC, 589 F.2d
658, 665 (D.C. Cir. 1978) (rule requiring regulated institutions
to hire private accountants to perform audits is procedural).
The OSHA may not, however, tell employers in one breath
that participation in the CCP requires more than mere com-
pliance with the OSH Act--which clearly ups the substantive
ante--and tell us in the next that the sole purpose of the CCP
is to make unnecessary the inspections it performs in order to
uncover violations of the Act. At least to the extent that
participation in the CCP requires more than adherence to
existing law, the Directive imposes upon employers more than
"the incidental inconveniences of complying with an enforce-
ment scheme," Bowen, 834 F.2d at 1051; it has a substantive
component.
This conclusion is supported also by the underlying reasons
for distinguishing between substantive and procedural rules
in prescribing procedures for rulemaking. The Directive is
intended to, and no doubt will, affect the safety practices of
thousands of employers. The value of ensuring that the
OSHA is well-informed and responsive to public comments
before it adopts a policy is therefore considerable. The other
side of the balance, moreover, is empty: The agency does not
contend that its need for "latitude in organizing [its] internal
operations" is implicated at all in the present case. Batter-
ton, 648 F.2d at 707.
Nor can the OSHA prevail by renewed resort to its obser-
vation that the Directive is not backed by the threat of a legal
sanction. Like the jurisdictional issue discussed above, the
question whether a rule is substantive or procedural for the
purposes of s 553(b) is functional, not formal. That is why
we examine how the rule affects not only the "rights" of
aggrieved parties, but their "interests" as well. Batterton,
648 F.2d at 707; see also Bowen, 834 F.2d at 1045 ("Substan-
tive rules are ones which grant rights, impose obligations, or
produce other significant effects on private interests"). Of
course, whether a rule has the force of law often will bear
upon its proper classification as substantive or procedural.
See, e.g., Chrysler Corp. v. Brown, 441 U.S. 281, 301-02 (1979)
(that agency rule is backed by the force of law suggests it is
substantive).* It will not necessarily be controlling, however.
Here, for example, the Directive will affect employers' inter-
__________
* Citing Chrysler Corp., the agency argues that because a rule
backed by the force of law is substantive, a rule that has no binding
legal authority must therefore be procedural. By the same reason-
ing, one would conclude that because all men are mortal, women
must be immortal.
ests in the same way that a plainly substantive rule mandat-
ing a comprehensive safety program would affect their rights;
that it so operates without having the force of law is therefore
of little, if any, significance. In practical terms, the Directive
places the burden of inspection upon those employers that fail
to adopt a CSHP, and will have a substantial impact upon all
employers within its purview--including those that acquiesce
in the agency's use of "leverage" against them. Consequent-
ly, we conclude that the Directive is a substantive rather than
a procedural rule.
2.General statement of policy
A general statement of policy "does not establish a binding
norm. It is not finally determinative of the issues or rights to
which it is addressed. The agency cannot apply or rely upon
[such a] policy as law because a general statement of policy
only announces what the agency seeks to establish as policy."
Pacific Gas & Elec. Co. v. FPC, 506 F.2d 33, 38 (D.C. Cir.
1974). The OSHA argues that the Directive meets this
definition, raising once more the point that the rule imposes
no formal legal obligation upon an employer that chooses not
to participate in the CCP.
In this context, the agency's contention has some intuitive
appeal: At first glance, one might think that a rule could not
be considered a "binding norm" unless it is backed by a
threat of legal sanction. Beyond that first glance, however,
its appeal is fleeting.
In American Bus Association v. United States, 627 F.2d
525 (1980), we held that the question whether a rule is a
policy statement is to be determined by whether it (1) has
only a prospective effect, and (2) leaves agency decisionmak-
ers free to exercise their informed discretion in individual
cases. See id. at 529-30. Both criteria lead us here to the
conclusion that the Directive is a substantive rule rather than
a policy statement. First, the Directive provides that every
employer that does not participate in the CCP will be
searched. The effect of the rule is therefore not to "an-
nounce[ ] the agency's tentative intentions for the future,"
Pacific Gas, 506 F.2d at 38, but to inform employers of a
decision already made. See American Bus Ass'n, 627 F.2d at
531 (order indicating that applicants providing certain docu-
ments would receive "immediate issuance" of certificate per-
mitting transport of goods to Canada had current, not pro-
spective, effect and therefore was not statement of policy); cf.
Pacific Gas, 506 F.2d at 40-41 (order intended to inform
public of types of plans that will receive "initial and tentative"
agency approval is policy statement). Indeed, the OSHA
admits in its brief that the inspection plan "leave[s] no room
for discretionary choices by inspectors in the field." And the
Directive itself suggests that the agency will not remove an
employer from the CCP unless the employer fails to abide by
the terms of the program. Therefore, although the Directive
does not impose a binding norm in the sense that it gives rise
to a legally enforceable duty, neither can it be shoehorned
into the exception for policy statements.
III. Conclusion
For the foregoing reasons, we hold first that the Directive
is a standard within the meaning of 29 U.S.C. s 655(f) and
therefore that we have jurisdiction over the Chamber's peti-
tion for review. Because the Directive is neither a procedural
rule nor a policy statement, we hold that the OSHA was
required by the APA to conduct a notice and comment
rulemaking proceeding before issuing it. The Directive is
therefore vacated without prejudice to the ability of the
agency to repromulgate it after observing the required proce-
dures.
So Ordered.
Silberman, Circuit Judge, dissenting: I would agree with
the majority on the merits if I thought we had jurisdiction to
review OSHA's Directive. But as I read Workplace Health
and Safety Council v. Reich, 56 F.3d 1465 (D.C. Cir. 1995),
the Directive is not a "standard" reviewable directly in the
court of appeals. That is so because, although I believe the
Directive is an APA regulation--I simply do not understand
the majority's explanation why it is not, see Maj. Op. at 6--it
is not directed at a "particular hazard." Therefore, under our
governing precedent, petitioners should be obliged to seek
review first in the district court.