Kaspar Wire Works, Inc. v. Secretary of Labor

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 11, 2001 Decided November 6, 2001

No. 00-1392

Kaspar Wire Works, Inc.,

Petitioner

v.

Secretary of Labor,

Respondent

On Petition for Review of an Order of the

Occupational Safety and Health Review Commission

Vic H. Henry argued the cause and filed the briefs for

petitioner.

John Shortall, Attorney, U.S. Department of Labor, argued

the cause for respondent. With him on the brief were Joseph

M. Woodward, Associate Solicitor, and Bruce F. Justh, Coun-

sel.

Before: Henderson, Randolph and Rogers, Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: Kaspar Wire Works, Inc. petitions

for review of the decision of the Occupational Safety and

Health Review Commission holding it responsible for hun-

dreds of willful violations of the Occupational Health and

Safety Act, 29 U.S.C. ss 651-678 (1990), and imposing penal-

ties for each violation. Kaspar Wire contends that the deci-

sion must be reversed for lack of substantial evidence to

support the findings of willfulness, and because the per

instance penalties are unlawful. We deny the petition.

I.

Kaspar Wire Works, Inc. is a manufacturer of custom wire

products and newspaper racks located in Shiner, Texas. Be-

tween 1982 and 1989, the Occupational Safety and Health

Administration ("OSHA") conducted inspections and issued

no citations for injury and illness recordkeeping violations.

However, following a six-month inspection by nine OSHA

inspectors in 1990, the Secretary of Labor issued two cita-

tions against Kaspar Wire for over 400 alleged willful and

serious violations of various standards under the Act, propos-

ing aggregate penalties of $1,236,000. An Administrative

Law Judge found that 382 violations were willful and assessed

an aggregate penalty of $257,700.

The Occupational Safety and Health Commission affirmed

the findings of willfulness and the assessment of per-instance

penalties for most of the recordkeeping violations, resulting in

an aggregate penalty of $224,050. The Commission relied on

evidence that the same personnel had been responsible for

recording serious injuries and illnesses at Kaspar Wire since

1970, that Kaspar Wire had properly reported such incidents

in the past, as reflected in the results of OSHA inspections

from 1982-89, and that OSHA's 1990 inspection revealed that

Kaspar Wire failed to record 357 injuries on form OSHA No.

200, comprising 86.5% of the injuries and illnesses that oc-

curred in its facility during 1988 and 1989. Included among

the unreported injuries were second- and third-degree burns,

a hand ligament injury resulting in 171 lost work days, at

least eight finger amputations (including one employee who

lost three fingers and lost eight weeks of work and another

employee who lost two fingers and lost nine weeks of work),

several broken bones, more than 30 eye injuries, and hun-

dreds of lacerations--all of which were only recorded on

Kaspar Wire's first-aid log. The Commission concluded that

these were knowing and willful violations that reflected a

"profound[ ] change[ ]" in Kaspar Wire's recordkeeping prac-

tices. One Commission member dissented on the ground that

the evidence did not support a finding of willfulness, but only

carelessness. The Commission reversed the Administrative

Law Judge's finding of willfulness with respect to errors in

Kaspar Wire's restricted work day recording, because it had

never recorded such items and had never been cited by

OSHA for such failures in the past.

II.

At the time of the citations in question, the Occupational

Health and Safety Act ("the Act") provided that "Any em-

ployer who willfully or repeatedly violates the requirements

of ... regulations prescribed pursuant to this chapter, may

be assessed a civil penalty of not more than $10,000 for each

violation." 29 U.S.C. s 666(a) (1990).1 The Act further pro-

vided:

Each employer shall make, keep and preserve, and make

available to the Secretary [of Labor] or the Secretary of

Health and Human Services, such records regarding his

activities relating to this chapter as the Secretary [of

__________

1 The penalty amounts were increased in November 1990 to

"not more than $70,000 for each violation, but not less than $5,000

for each willful violation." See id. (1999); Omnibus Budget Recon-

ciliation Act of 1990, Pub. L. No. 101-508, s 3101, 104 Stat. 1388

(1990). In assessing penalties against Kaspar Wire, the Commis-

sion applied the version of the statute in effect in September 1990,

when the citations were issued. The other statutory and regulatory

provisions relevant to this opinion have remained unchanged since

that time.

Labor], in cooperation with the Secretary of Health and

Human Services, may prescribe by regulation as neces-

sary or appropriate for the enforcement of this chapter

or for developing information regarding the causes and

prevention of occupational accidents and illnesses....

Id. s 657(c)(1). The OSHA recordkeeping regulations re-

quire an employer to:

(1) maintain in each establishment a log and summary of

all recordable occupational injuries and illnesses for that

establishment; and (2) enter each recordable injury and

illness on the log and summary as early as practicable

but no later than 6 working days after receiving informa-

tion that a recordable injury or illness has occurred.

29 C.F.R. s 1904.2(a) (2000). The regulation further specifies

that "[f]or this purpose form OSHA No. 200 or an equivalent

which is as readable and comprehensive to a person not

familiar with it shall be used. The log and summary shall be

completed in the detail provided in the form and instructions

on form OSHA No. 200." Id. "Recordable" is defined in the

regulations to mean:

any occupational injuries or illnesses which result in:

(1) Fatalities, regardless of the time between the injury

and death, or the length of the illness; or

(2) Lost workday cases, other than fatalities, that result

in lost workdays; or

(3) Nonfatal cases without lost workdays which result in

transfer to another job or termination of employ-

ment, or require medical treatment (other than first

aid) or involve: loss of consciousness or restriction

of work or motion. This category also includes any

diagnosed occupational illnesses which are reported

to the employer but are not classified as fatalities or

lost workday cases.

Id. s 1904.12(c). The Commission views the recordkeeping

requirements as "play[ing] a crucial role in providing the

information necessary to make workplaces safer and healthi-

er." General Motors Corp., Inland Div., 8 O.S.H. Cas.

(BNA) 2036 (1980).

Kaspar Wire did not argue either to the Commission or to

the court that its first aid log qualified as an "equivalent" to

OSHA form No. 200. Rather, Kaspar Wire admitted in its

brief and at oral argument that it did not comply with OSHA

recordkeeping requirements. For three reasons it contends,

however, that there is no basis for the Commission's finding

that its violations were willful. First, its recordkeeping per-

sonnel were trained by OSHA staff in 1971, and over the

years OSHA inspectors repeatedly reviewed its practices

without ever citing Kaspar Wire for a recordkeeping violation

until the 1990 inspection. Second, an OSHA inspector testi-

fied that it was reasonable for Kaspar Wire to assume that its

recordkeeping practices were in compliance with OSHA regu-

lations. Third, there is no record evidence that Kaspar Wire

changed its recordkeeping practices at some point in the

1980s. Kaspar Wire concludes, therefore, that its reasonable

reliance precludes a finding of willfulness.

Neither the Act nor the OSHA regulations define the

meaning of the term "willful." This circuit has defined a

"willful violation" in the OSHA context as "an act done

voluntarily with either an intentional disregard of, or plain

indifference to, the Act's requirements." Conie Construction,

Inc. v. Reich, 73 F.3d 382, 384 (D.C. Cir. 1995). The Commis-

sion relied on the Fifth Circuit's virtually identical definition

of a "willful violation" as "one involving voluntary action, done

with either an intentional disregard of, or plain indifference

to, the requirements of the [OSHA] statute." Georgia Elec.

Co. v. Marshall, 595 F.2d 309, 319 (5th Cir. 1979). Under

either definition, actual malice is not required; it is sufficient

that there be substantial evidence of voluntary and intentional

disregard for or indifference to the law. See Conie, 73 F.3d

at 384; Georgia Elec., 595 F.2d at 318-19. Consistent with

our standard of review, see National Eng'g & Contracting Co.

v. OSHRC, 45 F.3d 476, 481 (D.C. Cir. 1995), we conclude that

there was substantial evidence to support the Commission's

finding of willfulness.

Contrary to Kaspar Wire's position, the fact that the same

recordkeeping personnel who had been trained by OSHA

staff were still in charge in 1988 and 1989 actually supports

the Commission's conclusion that Kaspar Wire knowingly and

voluntarily chose to flout the recordkeeping requirements.

That is, Kaspar Wire could have no doubt about what the

regulations required. Kaspar Wire points to testimony by

one OSHA inspector that inspections conducted between 1982

and 1989 indicated that Kaspar Wire was complying with

OSHA's recordkeeping requirements, and that if Kaspar

Wire's recordkeeping practices remained unchanged it could

reasonably assume in March 1990 that its practices con-

formed to OSHA standards. Another inspector testified that

in his view Kaspar Wire's recordkeeping practices had not

changed over time. However, "the Commission is not bound

by the representations or interpretations of OSHA Compli-

ance Officers." L.R. Willson & Sons, Inc. v. Donovan, 685

F.2d 664, 676 (D.C. Cir. 1982). Further, two other OSHA

inspectors testified that based on the 1990 inspection, Kaspar

Wire had clearly and intentionally violated the recordkeeping

requirements of the statute, see 29 U.S.C. s 657(c)(1), and

that the Department of Labor's Bureau of Labor Statistics

had independently confirmed that all of the injuries in ques-

tion should have been recorded on OSHA form No. 200.

From this evidence, the Commission could reasonably infer,

see United States Testing Co., Inc. v. NLRB, 160 F.3d 14, 19

(D.C. Cir. 1998), that sometime prior to 1988, Kaspar Wire's

recordkeeping practices underwent a dramatic change that

was not explainable by changes in the number of persons it

employed. As the Commission found, in addition to the sheer

magnitude of the recordkeeping violations--which the Com-

mission characterized as "far exceed[ing] that of any other

case decided by the Commission"--the nature of the injuries

that were unreported belies Kaspar Wire's claim that its

actions were merely negligent or careless. The violations at

issue were not mere technical omissions; rather, the viola-

tions involved the failure to report injuries as serious as

finger amputations, broken bones, eye injuries and severe

burns that resulted in prolonged absences from work. Kas-

par Wire thus cannot reasonably contend that there was

confusion about whether injuries of this nature had to be

reported on form OSHA No. 200 or its equivalent. Nor can

Kaspar Wire seriously contend that it was entitled to rely on

its lack of prior violations to undermine a finding of willful-

ness. See Cedar Constr. Co. v. OSHRC, 587 F.2d 1303, 1306

(D.C. Cir. 1978); cf. Herman v. Palo Group Foster Home,

Inc., 183 F.3d 468, 473 (6th Cir. 1999); National Steel and

Shipbldg. Co. v. OSHRC, 607 F.2d 311, 317 (9th Cir. 1979).

Otherwise, an employer with no prior citations could choose

to violate a regulatory obligation without risking a finding of

willfulness, contrary to common sense and the definition of a

"willful violation" in the OSHA context.

Conie is instructive. In that case, a construction company

challenged an OSHA citation for the willful violation of a

regulation governing the slope of a trench that had been

excavated to install a sewer manhole. The OSHA compliance

officer testified that the company foreman acknowledged that

the walls of the trench did not comply with the sloping

regulation, but nevertheless opted to ignore the requirement

because he thought the trench was safe. The court upheld

the Commission's finding of willfulness in view of the evidence

that the company knew of the regulation and intentionally

chose not to comply with OSHA's excavation requirements.

See Conie, 73 F.3d at 384; see also Donovan v. Williams

Enterprises, Inc., 744 F.2d 170, 179-80 (D.C. Cir. 1984);

Finer Food Sales Co., Inc. v. Block, 708 F.2d 774, 777-78

(D.C. Cir. 1983). Similarly, here the Commission could rea-

sonably find that Kaspar Wire knew of and intentionally

chose to ignore OSHA recordkeeping regulations, and there-

by jeopardized not only the ability of the Secretary and

OSHA to carry out their statutory responsibilities, but the

health and safety of Kaspar Wire's employees.

Kaspar Wire's attempt to rely on cases cited by the Secre-

tary fails, for they clearly support the Secretary's position.

For example, although the court concluded in L.R. Willson,

685 F.2d at 676, that a finding of willfulness with respect to

an ambiguous safety requirement could not be sustained, this

result was so only because the employer had not been given

adequate notice of what was required. Kaspar Wire makes

no claim there was ambiguity about what the recordkeeping

regulations required. See also Brock v. Morello Bros.

Constr., Inc., 809 F.2d 161 (1st Cir. 1987); Williams Enter-

prises, 744 F.2d at 179-80; Cedar Constr., 587 F.2d at 1306.

Kaspar Wire protests nonetheless that the Commission's

finding of willfulness makes no sense because Kaspar Wire

had nothing to gain by violating the recordkeeping regula-

tions. All of the incidents not reported on form OSHA No.

200 were reported on the first aid log. Also, according to

Kaspar Wire, the incidence of reported violations for 1988 and

1989 on the form 200 exceeded the cutoff of 4.3% needed to

avoid future on-site safety inspections. These contentions

ignore two salient points. First, the Secretary has chosen to

fulfill her statutory responsibilities by requiring injury re-

porting on form OSHA No. 200. See 29 U.S.C.

s 657(c)(1),(c)(2) and (g)(2); 29 C.F.R. s 1904.2(a). There

was evidence before the Commission that Kaspar Wire was

an employer whose records were designed to show a low lost

workday injury rate that would exempt them from an on-site

safety inspection. On three previous occasions, OSHA in-

spections of Kaspar Wire revealed a lost workday injury rate

that was below the national average, thereby exempting the

company from a comprehensive safety inspection. As the

Secretary states in her brief:

Kaspar [Wire]'s indifference to recordkeeping require-

ments and inattention to accurate reporting produced a

picture of working conditions that would mislead employ-

ees and OSHA concerning the true extent of the hazards

at Kaspar [Wire]. By obscuring these injuries, Kaspar

[Wire] effectively perpetuated the hazards to which its

employees were exposed and it disabled an alarm mecha-

nism which might have alerted employees and OSHA to

problem areas in the workplace.

Respondent's Brief at 58.

Second, the Commission's finding of willfulness did not

require evidence of motive. As the Supreme Court explained

in TWA v. Thurston, 469 U.S. 111, 126 n.19 (1985), "an

employer's action may be 'willful' ... even though he did not

have an evil motive or bad purpose." See also Hazen Paper

Co. v. Biggins, 507 U.S. 604, 617 (1993). Although to find

willfulness the Commission had to find that Kaspar Wire's

conduct involved more than mere negligence or carelessness,

see McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133

(1988), there was substantial evidence of Kaspar Wire's know-

ing and intentional disregard of the recordkeeping require-

ments. See Conie, 73 F.3d at 384. The Commission took

note of both the unprecedented volume of violations and the

seriousness of the unreported injuries, as well as the abun-

dant evidence of Kaspar Wire's actual knowledge of what was

required under OSHA regulations based on its own admis-

sions and its past recordkeeping practices. Essentially, then,

the Commission was confronted with a record of unabashed

violations involving serious injuries to employees in the face

of certain knowledge of what was required. Congress and

the Secretary, not Kaspar Wire, have been entrusted with

determining how best to ensure worker health and safety,

and given the evidence of Kaspar Wire's egregious flouting of

regulatory requirements, the Commission's finding of willful-

ness is amply supported by the record.

Kaspar Wire's challenges to the sufficiency of the evidence

supporting the Commission's findings that it willfully failed to

install point-of-operations guards on a punch press, in viola-

tion of 29 C.F.R. s 1910.217(c)(1), and failed to ground porta-

ble lamps, in violation of 29 C.F.R. s 1910.304(f)(5)(V), are

meritless. An OSHA inspector photographed the unguarded

press, and based on the same photograph, an OSHA supervi-

sor determined that a citation was warranted because the

picture of one employee using the machine indicated that

multiple employees were probably using the machine. As to

the lamps, the evidence was unrebutted that the lamps were

portable and "clamp" type. Because the lamps were handled

roughly and used to illuminate trucks that were being loaded,

the Commission could reasonably infer that employees were

exposed to a danger of electric shock.

III.

Kaspar Wire also challenges the lawfulness of the per

instance penalties on statutory and procedural grounds.

Contending that the Secretary lacks statutory authority to

assess per instance penalties for "egregious and willful" viola-

tions, which is not among the four levels of violations set forth

in the Act, see 29 U.S.C. s 666(a)-(c), Kaspar Wire claims that

Congress did not authorize per instance penalties. Kaspar

Wire relies on a structural argument based on the Coal Mine

Health & Safety Act of 1969 ("Coal Mine Act"), 30 U.S.C.

s 801 et seq. (1996), which Congress enacted one year before

it enacted the Occupational Health and Safety Act. Kaspar

Wire further contends that even if the Secretary has authori-

ty to impose per instance penalties, her new policy violates

the Administrative Procedure Act either because her policy is

a rule subject to notice and comment under 5 U.S.C. s 553, or

because her policy was not published in the Federal Register.

None of these contentions has merit.

Section 17(a) of the Act provides that "[a]ny employer who

willfully or repeatedly violates the requirements of ... regu-

lations prescribed ... may be assessed a civil penalty of not

more than $10,000 for each violation." 29 U.S.C. s 666(a)

(emphasis added). The plain language of the Act could

hardly be clearer. The Commission has long agreed that per

instance citations and penalties are allowed. See Pepperidge

Farm, Inc., 17 O.S.H. Cas. (BNA) 1993, 2001 (1997); Sanders

Lead Co., 17 O.S.H. Cas. (BNA) 1197, 1204-05 (1995); J.A.

Jones Constr. Co., 15 O.S.H. Cas. (BNA) 2201, 2213-14 (1993);

Caterpillar, Inc., 15 O.S.H. Cas. (BNA) 2153, 2173 (1993);

Hoffman Constr. Co., 6 O.S.H. Cas. (BNA) 1274, 1275 (1978).

The availability of such penalties is consistent with the gener-

al principle that each violation of a statutory duty exposes the

violator to a separate statutory penalty. See, e.g., Missouri,

Kansas, & Texas Ry. Co. v. United States, 231 U.S. 112, 119

(1913); Used Equip. Sales, Inc. v. Dep't of Transp., 54 F.3d

862, 865 (D.C. Cir. 1995). The statutory language is consis-

tent, moreover, with discretionary per instance assessments

for "egregious and willful" violations, which the OSHA field

operations manual defines as "willful, repeated and high

gravity serious citations and failures to abate." Caterpillar,

Inc., 15 O.S.H. Cas. (BNA) 2153, 2170 (1993) (quoting OSHA

Instruction CPL 2.45A, Field Operations Manual, Ch. VI,

s A.2.i.(4), at VI-8 (Sept. 21, 1987)).

Kaspar Wire's reliance on the language of the Coal Mine

Act is misplaced. Section 111(a) of the Coal Mine Act (since

repealed and redesignated as the Federal Mine Safety and

Health Act of 1977) provides that "[e]ach occurrence of a

violation of a mandatory health or safety standard may

constitute a separate offense." 30 U.S.C. s 820(a). Howev-

er, as the Secretary points out, there is nothing to suggest

that Congress patterned the Act after the Coal Mine Act.

The Coal Mine Act employed a significantly different adminis-

trative structure, with rulemaking, enforcement and adjudica-

tory functions concentrated in the Secretary of the Interior.

See 29 U.S.C. ss 801 et seq. (1976). Only in 1977 was the

administrative structure made to conform to the Act's, with

the vesting of rulemaking and enforcement authority in the

Secretary of Labor and the establishment of an independent

review commission for adjudications. See 30 U.S.C. ss 814-

816, 961(a) (1986). In any event, Congress is not limited in

the language it may use across statutes to provide that per

instance penalties are authorized. Moreover, even had Con-

gress had not spoken directly to the question of per instance

penalties, the Secretary's interpretation would be entitled to

deference given her official duty, specialized expertise, inves-

tigatory knowledge, and other experience relevant to carrying

out the purposes of the Act. See United States v. Mead

Corp., 121 S.Ct. 2164, 2175 (2001) (citing Skidmore v. Swift &

Co., 323 U.S. 134, 138 (1944)); cf. Anthony Crane Rental, Inc.

v. Reich, 70 F.3d 1298, 1302 (D.C. Cir. 1995) (citing Martin v.

OSHRC, 499 U.S. 144, 150-51 (1991)); Used Equip. Sales, 54

F.3d at 864-65.

Nor was the imposition of per instance penalties unlawful

on procedural grounds. The Secretary's decision to assess

per instance penalties reflects use of an enforcement tool

within her authority. Cf. United Steelworkers of Am. v.

Herman, 216 F.3d 1095, 1097 (D.C. Cir. 2000). Her decision

followed a comprehensive review of Kaspar Wire's record-

keeping practices, and its virtual admission that it had not

complied with the recordkeeping rule. The Secretary has

never taken the position that she lacks authority or would

decline to issue per instance citations to employers who

commit multiple violations of the same regulatory require-

ment, and in fact has exercised her discretion to propose

separate penalties for discrete violations over the years. See,

e.g., RSR Corp., 11 O.S.H. Cas. (BNA) 1163, 1180-81 (1983);

Wheeling-Pittsburgh Steel Corp., 10 O.S.H. Cas. (BNA) 1242

(1981); Morris-Knudsen & Assoc., 8 O.S.H. Cas. (BNA) 2231,

2239 (1980); Hoffman Constr. Co., 6 O.S.H. Cs. (BNA) 1274

(1978). Consequently, the line of cases that require rulemak-

ing upon a change of policy are inapplicable. See, e.g., Nat'l

Ass'n of Home Health Agencies, v. Schweiker, 690 F.2d 932,

949 (D.C. Cir. 1982); cf. Aulenback, Inc. v. Fed. Highway

Admin., 103 F.3d 156, 168 (D.C. Cir. 1997) (citing 5 U.S.C.

s 553). In addition, there is nothing to Kaspar Wire's con-

tention that per-instance penalties "encode[ ] a substantive

value judgment or put[ ] a stamp of approval or disapproval

on a given type of behavior," American Hosp. Ass'n v.

Bowen, 834 F.2d 1037, 1047 (D.C. Cir. 1987), thereby render-

ing the policy ineligible for the procedural rule exemption

from notice and comment requirements. See 5 U.S.C.

s 553(b)(A). Such reasoning, as JEM Broadcasting Co., Inc.

v. FCC, 22 F.3d 320 (D.C. Cir. 1994), points out, "threatens to

swallow the procedural exception to notice and comment, for

agency housekeeping rules often embody a judgment about

what mechanics and processes are most efficient." Id. at 328.

Kaspar Wire's reliance on the Fifth Circuit's "substantial

impact" standard for notice and comment requirements, see

Brown Express, Inc. v. United States, 607 F.2d 695, 702 (5th

Cir. 1979), is unavailing because this circuit has expressly

rejected that standard. See American Postal Workers Un-

ion, AFL-CIO v. United States Postal Serv., 707 F.2d 548,

560 (D.C. Cir. 1983). Furthermore, because the statutory

authorization of per instance penalties is so clear from the

statutory language, publication in the Federal Register was

not required. See Malkam FM Assoc. v. FCC, 935 F.2d 1313,

1318 (D.C. Cir. 1991); 5 U.S.C. s 552(a)(2).

Finally, OSHA penalties are meant to "inflict pocket-book

deterrence." Atlas Roofing Co. v. OSHRC, 518 F.2d 990,

1001 (5th Cir. 1975), aff'd, 430 U.S. 442 (1977). Section 666(j)

of the Act provides that the Commission is to give "due

consideration to the appropriateness of the penalty with

respect to the size of the business of the employer charged,

the gravity of the violation, the good faith of the employer,

and the history of previous violations." The Commission

found that Kaspar Wire is a moderate-to-large sized company

employing approximately 850 to 900 employees with a history

of few previous OSHA violations, none of which pertained to

recordkeeping. It noted that the gravity of recordkeeping

violations is generally considered low. It reasonably declined,

however, to accord good faith credit to Kaspar Wire in light

of the fact that the bulk of the violations were willful and the

failures to record were "largely so obvious." The Commis-

sion affirmed the Administrative Law Judge's per instance

penalties in the amount of $250-$1000 per item, and upon

deducting $17,000 for various vacated items, affirmed an

aggregate penalty of $210,500 for willful recordkeeping viola-

tions. The Commission also affirmed an aggregate penalty of

$4,875 for non-serious restricted workday recording violations

based on the change in characterization. Kaspar Wire does

not contend that the Commission failed to give due consider-

ation to these penalty criteria, nor (apart from its objection to

the Secretary's authority to impose per-instance penalties)

does it claim that the specific penalty amounts assessed for

each violation were excessive.

Accordingly, we deny the petition for review.