In this petition the Secretary of Labor seeks judicial review of an order of the Occupational Safety and Health Review Commission in which the Commission, while upholding the Secretary's citations for violations of the Act, nonetheless vacated the proposed penalties for such citations. We affirm the order of the Commission.
The Occupational Safety and Health Act of 1970, now popularly known as "OSHA", is of recent origin and will have substantial impact upon American Industry. The Secretary of Labor is charged with its enforcement, and in this action he seeks to limit the power of the Commission to modify penalties proposed by him which are within lawful limits. Because this appears to be a case of first impression, and one which tests in part the respective roles of the Secretary and the Commission, some initial explication of OSHA is appropriate.
The Act was adopted in 1970 and became effective on April 28, 1971. The bill as passed is a compromise between two competing bills that were submitted both to the House and to the Senate. One bill was administration-backed and the other was strongly supported by organized labor. Although the difference in the two bills primarily involved whether both rule-making and enforcement powers should be located in the same agency, it is clear that both sides favored a bill which would establish a comprehensive program that would substantially reduce the large number of job-related deaths, injuries and health hazards which have existed.
The Act provides for the development of a "laundry-list" of violations. Companies are subject to periodic compliance inspections which are carried out at random either upon complaint or upon the inspector's own initiative.
A violation is "serious" if there is a possibility of an accident and a substantial probability that death or serious physical injury would result.
On March 28, 1972, a compliance officer of the United States Department of Labor conducted a compliance investigation of respondent Interstate Glass Company, Lincoln, Nebraska. As a result of conditions uncovered during this investigation, Interstate was cited by the Secretary of Labor on March 29, 1972, for seven "non-serious" violations.
On April 13, 1972, respondent advised the Secretary that all five remaining violations were abated and that it wished to contest the citations and proposed penalties. This notice of contest was properly transmitted to the Secretary, who thereupon transmitted it to the Commission. The Secretary then submitted to the Commission a complaint under 29 CFR § 2200.7(d) setting forth the substance and penalties of the five violations. The respondent company answered, admitting a violation as to items 3 and 4 but denying the remaining allegations (items 1, 2, 5).
The Commission Judge, after hearing, determined that all five proposed violations did exist as set forth in the citation and were supported by the evidence. However, he vacated all five proposed penalties on the grounds that employees had never complained of the conditions, the employer was either unaware that the conditions were violations or had no knowledge of them, and the employer exercised diligence and good faith in abating the hazards immediately after the citation. Consequently, he concluded, "it will serve no useful purpose of the Act to levy these small fines under the total circumstances involved in this case." It is the vacation of the proposed penalties from which the Secretary appeals.
SCOPE OF ADMINISTRATIVE REVIEW
The Commission is granted the power to review either the citation or the proposed penalty or both under 29 U.S.C. § 659(a) and (c). The scope of such review is set forth in § 659(c):
Some writers have interpreted this section of the Act as granting the Commission final authority to affirm, modify, or vacate penalties.
It is the position of the Secretary-Petitioner that by vacating all five proposed penalties, the Commission abused its discretion and frustrated the purposes of the Act. This assertion is based on a well-reasoned argument that such action frustrates the purpose of OSHA, which relies primarily on voluntary compliance, by nullifying the employer's incentive in self-policing and self-enforcement. Notwithstanding the validity of this argument, the threshold question is whether the review by the Commission is de novo.
Prior to the Commission's review, the Secretary had already taken the "circumstances" into consideration in setting the proposed penalties. As each violation was categorized as "non-serious", a fine not exceeding $1,000.00 was authorized, although not required, for each violation. 29 U.S.C. § 666(c). After placing each violation in a particular category depending upon its gravity, the Secretary reduced the five unadjusted penalties (1) 20% for the good faith of employer, (2) 10% for having less than 20 employees and (3) 20% for having no history of past violations. The adjusted penalties were further reduced 50% because all violations were abated within the period specified. This method of calculating proposed penalties is the standard procedure prescribed by the Secretary's published Compliance Operations Manual. It must be assumed that the Secretary's complaint is the Commission's failure to uphold his procedures for imposing penalties when the Commission affirms the Secretary's findings of violations. Obviously, the Secretary does not want his imposed penalties continually contested with the hope or expectation of the employer that the Commission will reduce or vacate them.
The Secretary's argument, however, ignores the clear statutory language. His imposition of penalty is denominated a "proposed penalty". 29 U.S.C. § 659(a). This proposed penalty becomes final only if the employer accepts it or does not "contest" it, in which case it becomes a final order not subject to review by any court or agency. 29 U.S.C. § 659(a). If, on the other hand, the employer contests the order and proposed penalty, the Commission acts de novo.
The Congressional intent is thus plainly manifested that the Commission shall be the final arbiter of penalties if the Secretary's proposals are contested and that, in such a case, the Secretary's proposals merely become advisory. We find no authority to the contrary. In one recent Fifth Circuit opinion, the court vacated an order of the Commission setting aside proposed penalties and reinstated the Secretary's proposed penalties. Brennan v. Occupational Safety and Health Review Commission and Brent Towing Co., Inc., 481 F.2d 619 (5th Cir.1973). The question presented there was whether a particular letter constituted a "notice of contest". The Commission determined that it did and vacated the proposed penalties because the Secretary had not forwarded the letter within the required time period. The respondent-employer conceded its liability and indicated a desire not to proceed further. The court refused to decide the issue presented by the Secretary and the Commission because the "chief party in interest has long since ... declined to remain the focal center for an administrative whirlwind of such minor proportions."
SCOPE OF JUDICIAL REVIEW
29 U.S.C. § 660(a) authorizes review in the Court of Appeals for "any person adversely affected or aggrieved" and § 660(b) authorizes review for the Secretary. Section 660(a) provides in pertinent part:
The reviewing court is thus bound to apply the substantial evidence test to the Commission's findings of fact. The assessment of penalties is not a finding but the exercise of a discretionary grant of power. And while the court has jurisdiction to review and power to modify, the test of a penalty within the statutory range must be whether the Commission abused its discretion.
In this case, the Commission had discretion to impose a fine of up to $1,000 for each non-serious violation.
The annual figures reflect that there are over 14,000 deaths and two million injuries caused by industrial accidents. The legislative history of OSHA may be found at 1970 U.S.Code Cong. & Admin.News, 91st Cong., 2d Sess., at 1852.
Violation CFR Section Amount of Fine (1) Excessive play in forklift [1910.178(p)(1)] $ 25 (2) Inaccessible electrical panel controlling plant's heat and power tools [1910.310(i)] 25 (3) Flammable liquid stored in open containers [1910.106(e)(2)(ii)] 125 (4) Power saw with missing ground prong [1910.314(d)(4)(iii)(c)] 25 (5) Defective ladder [1910.29(d)(1)(x)] 25 (6) Loading area not protected with required guardrails [1910.23(c)(1)] 75 (7) Insufficient fire extinguishers [1910.157(c)(1)(iv)] 75