SECRETARY OF LABOR,

Complainant,

v.

FALCON STEEL COMPANY, INC.,

Respondent.

OSHRC Docket Nos.

89-2883 and 89-3444

(consolidated)

ORDER

Respondent, Falcon Steel Company, Inc. ("Falcon") has moved for reconsideration of the Commission's Order of August 9, 1990 insofar as that Order granted a partial stay of the hearing. Falcon's motion is granted, and the partial stay is vacated.

The Commission also vacates that part of the aforesaid order granting Falcon's Petition for Interlocutory Review on the issue of whether a defense of economic infeasibility should be recognized in these consolidated cases. When it requested interlocutory review of the Administrative Law Judge's July 3, 1990 Order denying its motion to compel discovery, Falcon represented that discovery was necessary in order for it to prepare its defense that compliance with 29 C.F.R. § 1926.105(a) is economically infeasible in its industry. Since both parties now indicate that they are prepared to proceed to hearing on the § 1926.105(a) allegations, there is no need for interlocutory review of the judge's discovery order. For this reason, the importance of the issue raised in the petition and grant of interlocutory review has diminished, and this issue does not warrant resolution under the interlocutory appeal process.

Furthermore, we do not disturb the judge's Order of July 3, 1990. The judge may proceed as he sees fit to achieve a just and expeditious resolution of the issues contested in these cases.

Edwin G. Foulke, Jr.
Chairman

Velma Montoya
Commissioner

Donald G. Wiseman
Commissioner

Dated: August 13, 1990

SECRETARY OF LABOR,

Complainant,

v.

FALCON STEEL CO., INC.,

Respondent.

OSHRC Docket Nos.

89-2883 & 89-3444

ORDER

The Commission grants the Respondent's Petition for Interlocutory Review. In the Order Denying Respondent's Motion to Compel Answers to Certain Interrogatories, Production of Certain Documents and Request for a Hearing on Motions, entered on July 3, 1990, Administrative Law Judge Michael H. Schoenfeld held that Respondent could not assert the defense of general industry-wide infeasibility based on economic considerations and could not conduct discovery to obtain evidence relating to that defense. As a result of the Commission's decision in Dun-Par Engineered Form Co., 12 BNA OSHC 1949, 1986-87 CCH OSHD ¶ 27,650 (No. 79-2553, 1986), rev'd on other grounds, 843 F.2d 1135 (8th Cir. 1988), employers are entitled to assert a defense of infeasibility of compliance with a cited standard in enforcement proceedings before the Commission. However, the Commission has not yet addressed the issue of whether an infeasibility defense may be based on economic, rather than technological, considerations. While the Commission has not held that such a defense can be raised, there is appellate court authority indicating that it is permissible for the defense of general industry-wide infeasibility based on economic considerations to be asserted in proceedings before the Commission. United Steelworkers of America v. Marshall, 647 F.2d 1189, 1273 (D.C. Cir. 1980) cert, denied, 453 U.S. 913 (1981), Atlantic & Gulf Stevedores, Inc. v. OSHRC, 534 F.2d 541, 550 (3rd Cir. 1976).

Review is therefore granted on the following issue:

Did the Administrative Law Judge err in ruling that the Respondent cannot defend against its alleged violation of 29 C.F.R. 1926.105(a) on the ground that it is economically infeasible for employers in the steel erection industry (including the Respondent) to comply with that standard by installing perimeter safety nets on high-rise buildings?

The Commission concludes that this issue is "an important question of law or policy about which there is substantial ground for difference of opinion and that immediate review of the ruling may materially expedite the final disposition of the proceedings." Interlocutory review of the judge's ruling is therefore justified under 29 C.F.R. 2200.73(a)(1). The parties are hereby notified that a briefing order will be issued under separate cover pursuant to section 2200.73(f).

The Respondent's Motion for a Partial Stay in this proceeding is granted in part and denied in part. The Commission grants a stay limited to the alleged violations of 29 C.F.R. 1926.105(a) (citation 2, item 2 in docket no. 89-2883 and citation 2, item 1 in docket no. 89-3444). The Commission stays both discovery and the scheduled hearing to the extent that they relate to these two citation items. Proceedings (including the hearing scheduled for August 13, 1990) are not stayed, however, with respect to any other citation items that are at issue in these cases.

Finally, the Commission grants the Respondent's Motion for Leave to Reply to Opposition to Petition for Interlocutory Review. The Respondent's Reply, which has already been filed with the Commission, is hereby accepted into the record.

Edwin G. Foulke, Jr.
Chairman

Velma Montoya
Commissioner

Donald G. Wiseman
Commissioner

Dated:   August 9, 1990

ELIZABETH DOLE,

SECRETARY OF LABOR,

UNITED STATES DEPARTMENT OF LABOR,

Complainant,

v.

FALCON STEEL COMPANY, INC.

Respondent.

OSHRC Docket Nos. 89-2883

and 89-3444

(Consolidated)

PETITION FOR INTERLOCUTORY REVIEW

Respondent, FALCON STEEL COMPANY, INC. ("Falcon"), respectfully petitions for interlocutory review of the ruling issued by Administrative Law Judge Michael H. Schoenfeld on July 3, 1990. The ruling is contained in an order entitled, "Order Denying Respondent's Motion. to Compel Answers to Certain Interrogatories, Production of Certain Documents and Request for a Hearing on Motions." A copy of the Order was supplied on July 9, 1990.

Falcon has also filed a separate Motion for Partial Stay of Proceedings. The Motion asks that the hearing, now scheduled to begin on August 13, 1990, be stayed until the issues raised by this Petition are resolved. Falcon does not ask, however, that the ongoing discovery be stayed.

Falcon filed a statement of its corporate affiliations on July 9, 1990. That statement is incorporated into this petition by reference.

I. Summary of Falcon's Petition

OSHA has alleged that Falcon violated 29 C.F.R. § 1926.105 because it did not erect perimeter nets during steel erection work on a 60- story high-rise office building in Philadelphia, Pennsylvania. Falcon has pleaded that, if the standards are construed to impose this requirement in high-rise steel erection work, then compliance is infeasible, both technologically and economically.

Falcon had intended to show that compliance is economically infeasible because the steel erection industry (including, of course, Falcon) will be driven out of business if OSHA succeeds in forcing steel erectors to use perimeter nets. Falcon intended to show, among other things, that technological changes in concrete construction in the last ten to fifteen years have made concrete construction techniques closely competitive with steel erection techniques. How an owner decides between them, Falcon will show, depends greatly on their costs. It is undisputed that throughout the nation, steel erectors overwhelmingly have not used perimeter nets for fall protection. Falcon intended to show that compliance with OSHA's requirements relating to perimeter nets will add significantly to the cost of steel erection, especially given the delay in erection which deployment and redeployment of nets would create. Falcon also intended to show that if steel erectors are now required to add these costs to their bids, high-rise steel will be priced out of the market because owners will increasingly choose concrete as the erection method.

To support this defense, Falcon had sought to assemble factual material through the discovery process, including information that OSHA had gathered about the changing technology and competition in high-rise construction. While attempting to do so, Falcon was unexpectedly met with a sweeping ruling from the Administrative Law Judge. The ruling holds that discovery will not be permitted because, in the Judge's opinion, Falcon's defense lacks merit as a matter of law. The Judge's Order states: "General industry-wide infeasibility of compliance with an occupational safety and health standard adopted as such pursuant to section. 6(a) of the Occupational Safety and Health Act of 1970, 29 U.S.C. § 655(a), is not a valid defense to a citation."

The Judge's ruling is wrong.

First, as will be shown below, the courts of appeals, including the circuit to which this case is appealable, agree that economic infeasibility is a defense, whether the standard is adopted under Section 6(a) or 6(b) or 6(b)(5). The reason is simple: OSHA has no authority to adopt a standard that will drive an industry out of business. See United Steelworkers v. Marshall, 647 F.2d 1189, 1272 (D.C. Cir. 1981).

Second, the judge's reasoning flies in the face of Commission precedent. The Judge reasoned that there is no economic infeasibility defense for Section 6(a) standards because Section 6(a) "was, in effect, a Congressional adoption of those regulations . . . whether [they] fully met the new definition of occupational safety and health standards in section 3(8) of the Act or not." Judge's Order at 3. But this reasoning applies equally to the technological aspect of infeasibility and the Commission has long permitted employers to raise that aspect as a defense. E.g., Dun-Par Engineered Foam Co., 12 BNA OSHC 1949, 1956 (No. 79-2553, 1986).

Falcon does not seek interlocutory review merely to correct error. The question raised by the Judge's ruling in important. If the answer is not already clear, it in worth answering clearly once and for all. Moreover, interlocutory review by the Commission will avoid an utter waste of the time and resources of both Falcon and the Commission. A ruling favorable to Falcon will avoid a truncated and utterly pointless trial and an unnecessary retrial. As matters now stand, Falcon's attempts to introduce evidence of economic infeasibility would presumably be rejected by the Judge as irrelevant. Falcon represents that this evidence would likely include the testimony of several export witnesses. Then, if the Commission reverses the Judge on discretionary review and holds that the evidence is relevant because economic infeasibility is a defense, the case would have to be sent back to the Judge and retried at great expense to the Commission, the Secretary and Falcon. Only interlocutory review will avoid this wasteful exercise and get this case back onto the right track.

Avoiding wasteful litigation is particularly important in this case because Falcon is a relatively small family-owned business whose existence is on the line. Although Falcon has tried to conserve its limited resources to prepare for trial, the Judge's ruling ensures that they will largely be wasted.

Falcon appeals, under Commission Rule 2200.73(a), to the Commission's discretion and asks that it grant interlocutory review of the Judge's ruling.

II. Background

1. Falcon was the steel erection contractor in the construction at Liberty Place, Phase II, a 58-story office building in Philadelphia, Pennsylvania.

2. Item 1 of Citation 2 in Docket No. 89-3444 alleges that Falcon violated 29 C.F.R. 1926.105(a) because it did not erect safety nets to protect against exterior falls. Item 2 of Citation No. 1 alleges that Falcon violated § 1926.105(c)(1) because it did not erect safety nets eight feet beyond the perimeter of the building.

3. Item 2 of Citation 2 in Docket No. 89-2883 similarly alleges that Falcon violated 29 C.F.R. § 1926.105(a) because employees at the perimeter of the building were not protected by safety nets or belts.

4. Falcon's Answer to the Complaints in both cases pleaded that perimeter netting is infeasible. Falcon alleged that it would have been

both technically and economically infeasible and impractical to have provided safety nets. The technical difficulties in installing and using nets, in particular "jumping" the nets every two floors as erection proceeds, coupled with the substantial cost of using nets, including the additional cost resulting not only for the steel erection portion of construction, but also for related construction activities on a project, make the use of exterior safety nets infeasible and impractical in high-rise steel erection such as was involved in the cited activity.

Falcon also pleaded another aspect of economic infeasibility as a defense:

Respondent asserts that in the instances cited as a violation of 29 C.F.R. § 1926.105(a) for failing to provide safety nets, the benefits of providing safety nets did not justify or outweigh the costs that would have been involved, not was there even a reasonable relationship between the costs and benefits of providing nets.

5. On May 5, the parties jointly stated to the Judge that, "Both cases include citations alleging willful violations of 29 C.F.R. § 1926.105(a), which raise the question whether in the absence of other practical means of providing fall protection to ironworkers in high-rise steel erection . . . Falcon was required to provide perimeter safety nets." Joint Motion for Consolidation and Suggestions for Discovery Timetable, paragraph 2, on page 2.

6. On May 4, 1990, and on other occasions, Falcon answered interrogatories (written questions) posed by the Secretary regarding the evidence that it would introduce at the hearing. Falcon stated that it would offer the testimony of several expert witnesses the subject of the effect of the cost of perimeter net protection on the steel erection's industry share of the high-rise construction market.

7. On May 11, 1990, Falcon served upon the Secretary interrogatories 12 and 13. These interrogatories (written questions) asked the Secretary to identify the most senior persons working at or for OSHA, subordinate to the head of OSHA, responsible for new general fall protection and steel erection standards which OSHA is now developing. Falcon also moved that the persons whom the Secretary identified be deposed.

8. The Secretary's complete response to Falcon's interrogatories was:

Complainant objects to this interrogatory on the grounds of relevancy. See Long Beach Container Terminal, Inc., 811 F.2d 477, 479 (9th Cir. 1987).

Long Beach Container holds that an OSHA staff employee's view of the meaning of a standard is not the Secretary's "official view" of the standard. 811 F.2d at 479, 13 BRA OSHC at 110.

9. Along with its interrogatories, Falcon also filed requests for the production of documents. Request Nos. 33 and 34 asked for copies of documents relating to OSHA's proposed fall protection and steel erection rulemakings. Among the documents requested were those that explained why OSHA had proposed in a new fall protection standard (proposed § 1926.501 (b) (2)) to protect workers constructing "leading edges" in concrete construction with a "safety monitoring system" rather than with perimeter safety nets, and documents that explained why OSHA stated in the preamble to the proposal (51 Fed. Reg. 42721 (November 26, 1986)), that:

OSHA also believes that a requirement to erect safety nets often is not feasible because of insufficient room to rig a safety net and because the net would have to be constantly moved.

The Secretary's complete response to these requests was: "The Complainant objects to this request on the grounds of relevancy."

10. Nowhere has the Secretary ever objected to these discovery requests on the ground that they sought privileged information or documents. For example, the Secretary did not assert -- and therefore waived -- any so-called "deliberative process" privilege. By contrast, the Secretary asserted the so-called "deliberative process privilege" with respect to other discovery requests. [[1/]] Nor did the Secretary claim that the discovery was "unduly burdensome" within the meaning of Commission Rule 2200.52(c). By contrast, the Secretary had made this claim with respect to other discovery requests.[[2/]]

11. After receiving the Secretary's "relevancy" objections, Falcon had no choice but to file a motion to compel answers to its interrogatories and requests for production of the documents. In its motion and supporting papers, Falcon explained why the Secretary's "relevancy" objections lacked merit.

First, the Commission's rules do not require that information sought in discovery be "relevant". Commission Rule 2200.52(b) is much more liberal than that. It permits discovery of information that is broadly relevant to the "subject matter involved in the pending case" and makes even inadmissible evidence discoverable if it "appears reasonably calculated to lead to discovery of admissible evidence . . . ."

Second, Falcon explained why the information it sought was relevant to the subject matter of this case: Those who are conducting the steel erection and fall protection rulemakings for OSHA have evidence about the feasibility of perimeter nets, including the economic effect of a requirement for perimeter nets upon the steel erection industry. Falcon even submitted an affidavit from one of the experts in structural steel erection expected to testify at trial stating why the requested documents would be helpful to him in forming his opinion. Finally, Falcon explained that whether OSHA obtained this information in the context of a rulemaking is beside the point: "If OSHA officials and consultants have facts that could lead to the discovery of admissible evidence about the infeasibility of nets, Falcon is entitled to their evidence without regard to how it was gained." In response to the Secretary's reliance on Long Beach Terminal, Falcon pointed out that it wanted to get facts that OSHA officials hold about the infeasibility of using nets in steel erection, not necessarily their private opinions about what OSHA's current standards mean.

12. On July 3, 1990, the Judge denied Falcon's attempts to discover what OSHA knows about the infeasibility of perimeter nets. Understandably, the Judge did not find that OSHA had no information relevant to the subject matter of Falcon's defense. Instead, the Judge declared that Falcon's defense was invalid as a matter of law. The Judge adopted a new theory, not suggested by the Secretary, that an employer may not assort an economic feasibility defense if the cited standard was adopted under Section 6(a) of the Act.

Falcon now seeks interlocutory review of this ruling.

III. Discussion

The Judge's Order raises a very important question of law or policy. Falcon will show that there is substantial ground for disagreement with the Judge's ruling and that immediate review of the ruling will materially expedite the final disposition of the proceedings.

The important question of law or policy raised by the Order is: May an employer defend against a citation on the ground that a standard adopted under Section 6(a) is infeasible as applied to his entire industry and that he is typical of the entire industry?

Issues Not Presented By The Petition. There are two issues that this Petition does not present.

First, this Petition does not discuss the issue of "relevance" because the Judge did not pass on that issue. The Judge did not find that FaIcon's discovery requests were not relevant to the economic infeasibility of perimeter nets in steel erection work. The Judge held only that economic infeasibility is not a defense at all. Whether economic infeasibility is a defense is, therefore, the only issue that Falcon seeks review of.

Second, Falcon does not claim as error in this petition for interlocutory review the Judge's departure from the usual rule that questions of relevance for purposes of discovery are to judged from the standpoint of relevance to the issues as pleaded, rather than the issues as the Judge believes they should have been pleaded. See 4 Moore's Federal Practice ¶ 25-56[1], pp. 26-99 to 26-100. Falcon does not raise that issue at this time because correction of any error now would accomplish little and would be wasteful. After such a correction, the Secretary would undoubtedly file a motion for partial judgment on the pleadings or a motion to strike the economic aspects of Falcon's infeasibility defense, or would object to Falcon's attempts to introduce evidence on the point at the hearing. Given the Judge's opinion on the substantive issue, the parties would then be back before the Commission, having accomplished little or nothing and having wanted their time and money and that of the Judge.

Economic feasibility in enforcement proceedings. Before Falcon discusses the reason why this Petition should be granted, Falcon presents for the information of the Commission the following brief synopsis of the role that economic infeasibility plays in enforcement proceedings under the Act:
Section 6(b) health standards: Economic infeasibility is a defense in an enforcement proceeding concerning a standard adopted under Section 6(b)(5) of the Act, which covers toxic chemicals and harmful physical agents. United Steelworkers v. Marshall, 647 F.2d 1189, 1273 (D.C. Cir. 1980). The only question for standards adopted under this section has been whether economic infeasibility includes cost-benefit analysis.

The Supreme Court held that it does not. American Textile Manufacturers Institute v. Donovan, 452 U.S. 490, 509 (1981). All agree, however, that economic infeasibility does include claims that the standard would drive an industry out of business, Steelworkers, 647 F.2d at 1273, because OSHA has no power to adopt a standard that would cause the demise of an entire industry because of, among other things, inter-industry competition. Id. at 1265. The court stated:

First, we see nothing to prevent an employer from raising a defense in an enforcement proceeding that the standard has proved infeasible for all similar companies -- not just his own. The alleged infeasibility may be technological . . . . Or it might be economic, where the defending firm can use its own experience to prove that no employer could afford to meet the standard, see Atlantic & Gulf Stevedores v. OSHA supra, 534 F.2d at 555, or prove that its own demise would wreck the competitive structure of the industry.

Id. at 1273.

Section 6(b) safety standards:  Economic infeasibility would appear to be a defense in an enforcement proceeding concerning a safety standard adopted under Section 6(b). See National Grain & Feed Association v. OSHA, 866 F.2d 717, 728 (5th Cir. 1989). Unlike health standards adopted under Section 6(b)(5), such an economic infeasibility defense would include both cost-benefit analysis and whether the standard would threaten an industry's "long-term profitability and competitiveness." Id. at 728, 738.

Section 6(c) emergency temporary standards: The rule is apparently the same as for Section 6(b) standards. Id.; see also Asbestos Information Ass'n v. OSHA, 727 F.2d 415, 423 (5th Cir, 1984) (emergency temporary standard "must, on balance, produce a benefit the costs of which are not unreasonable.").

Section 6(a) standards using the word "feasible": The Commission has held that the very nature of established federal standards requires that any such standard using the word "feasible" be construed to incorporate cost-benefit analysis. Sherwin-Williams Co., 11 BNA OSHC 2105, 2110 (No. 14131, 1984). Even those Commissioners most favorable to the Secretary's arguments agreed that the use of the word "feasible" in the standards at a minimum permitted employers to defend on the basis that they would be driven out of business. See the opinion of former Commissioners Cleary and Cottine in Sun Ship, Inc., 11 BRA OSHC 1028, 1032-1033 (No. 16118, 1982) ("By analogy [from Section 6(b)(5), considerations of cost must also enter into whether [noise] controls are feasible under section 1910.95(b)(1). Generally, [such] controls would be economically infeasible if their cost would seriously jeopardize the cited employer's long-term financial profitability and competitiveness."). The Secretary's own position was the same. See Castle & Cooke Foods, 5 BRA OSHC 1435 (No. 10925, 1977) (Secretary argues that economics relevant under economic viability test), aff'd, 692 F.2d 641 (9th Cir. 1982).

Section 6(c) emergency temporary standards: The rule is apparently the same as for Section 6(b) standards.  Id.; see also Asbestos Information Ass'n v. OSHA, 727 F. 2d 415, 423 (5th Cir. 1984) (emergency temporary standard "must, on balance, produce a benefit the costs of which are not unreasonable.")

Section 6(a) standards using the word "feasible": The Commission has held that the very nature of established federal standards requires that any such standard using the word "feasible" be construed to incorporate cost-benefit analysis. Sherwin-Williams Co., 11 BNA OSHC 2105, 2110 (No. 14131, 1984).  Even those Commissioners most favorable to the Secretary's arguments agreed that the use of the word "feasible" in the standards at a minimum permitted employers to defend on the basis that they would be driven out of business.  See the opinion of former Commissioners Cleary and Cottine in Sun Ship, Inc., 11 BNA OSHC 1028, 1032-1033 (No. 16118, 1982) ("By analogy [from Section 6(b)(5), considerations of cost must also enter into whether [noise] controls are feasible under section 1910.95(b)(1).  Generally, [such] controls would be economically infeasible if their cost would seriously jeopardize the cited employer's long-term financial profitability and competitiveness.").  The Secretary's own position was the same.  See Castle & Cooke Foods, 5 BNA OSHC 1435 (No. 10925, 1977) (Secretary argues that economics relevant under economic viability test), aff'd, 692 F. 2d 641 (9th Cir. 1982).

Section 6(a) standards not using the word "feasible": The courts seem to agree that economic infeasibility is a defense to a Section 6(a) standard. See Donovan v. Williams Enterprises, 744 F.2d 170, 178 (D.C. Cir. 1984) ("The impossibility (or infeasibility) defense encompasses both technological and economic infeasibility"); Faultless Division, Bliss & Laughlin Industries, Inc. v. Secretary of Labor, 674 F.2d 1177, 1189 (7th Cir. 1982) (financial imperilment constitutes defense of economic infeasibility); Southern Colorado Prestress Co. v. OSHRC, 586 F.2d 1342, 1351 (10th Cir. 1978) (economic infeasibility a defense). The Commission has held that the very nature of Section 6(a) standard allows employers to assert an infeasibility defense even it the standard does not use the word "feasible". See Dun-Par Engineered Form Co., 12 BRA OSHC 1949 (No. 79-2553). rev'd on another ground, 843 F.2d 1135 (8th Cir. 1988). Moreover, Administrative law judges' decisions available to Falcon at this time show that at least some Commission judges do entertain claims of economic infeasibility.[[3/]]

Section 5(a)(1): The Commission apparently considers economic feasibility, including its cost-benefit aspects, when determining whether a proposed abatement method is feasible. See United States Steel Co.,12 BNA OSHC 1692, 1701 (No. 79-1998, 1986) (quoted below).

A. Whether Economic Infeasibility Is A Defense If the Cited Standard Was Adopted Under Section 6(a) Is An Important Issue of Law or Policy

The overwhelming majority of all OSHA standards are still Section 6(a) standards. Whether and to what extent economic infeasibility is a defense to n prosecution under such a standard is, therefore, an important question of law.

In Dun-Par Engineered Form Co., 12 BNA OSHC 1949 (No. 79-2553), rev'd on another ground, 843 F.2d 1135 (8th Cir. 1988), the Commission held that the very nature of standards adopted under Section 6(a) requires that there be an infeasibility defense. The Commission pointed out that standards such as 29 C.F.R. § 1926.105 -- that were first adopted as interpretive regulations under the Construction Safety Act [[4/]] or the Walsh-Healey Public Contracts Act [[5/]] "could not possibly have been written with literal application in mind." 12 BNA OSHC at 1955. Therefore, the Commission held, employers are entitled to defend on the ground that the application of a standard is infeasible.

The Commission in Dun-Par did not, however, have occasion to expressly discuss several important questions: Does the infeasibility defense encompass economic infeasibility? If so, how are economic factors to be treated? Does the economic component consist solely of a going-out-of-business element i.e., that a standard is so onerous that it will drive the cited employer out of business? May the employer show that the standard is so onerous that it will drive his entire industry -- including, of course, him -- out of business? Does it also encompass a rough cost-benefit sort of feasibility -- i.e., that the costs imposed by a standard bear no reasonable relationship to its benefits?

All of these questions are raised in this case. They are important because their clear resolution by the Commission will affect nearly every claim of infeasibility. For example, a holding that an employer may defend on the ground of rough cost--benefit infeasibility -- i.e., that the costs of compliance bear no reasonable relationship to the benefits -- will clarify a question that has long bedeviled employers. More importantly, a Commission opinion that finally clarifies whether an employer may defend on the ground that an OSHA requirement would drive his industry out of business would be helpful indeed to industries -- such as the high-rise steel erection industry -- on the verge of inviability. A Commission opinion on the issue would also exert a salutary influence on attempts by OSHA to prosecute such industries. Finally, employers should be informed once and for all of how the Commission will consider economic factors in determining infeasibility. Especially if the viability of an entire industry is threatened, the Commission's case law should clearly indicate to its members what facts they would have to present to save their businesses.

The Commission has repeatedly and thoroughly examined the role of economics in the interpretation of the word "feasible" in one Section 6(a) standard (OSHA's noise control standard, 29 C.F.R. § 1910.95(b)(1)). It did so because the role of economics in feasibility under that one Section 6(a) standard is important. The role of economics is even more important here, for this case touches on the role of economics in the application of all Section 6(a) standards.

B. There Are Substantial Grounds for A Difference of
     Opinion With the Administrative Law Judge

Although the Commission has not yet had occasion to speak directly to these important questions, the answer should nevertheless be clear. In other contexts in which the Commission has been called upon to interpret the term "feasible", the Commission has held or strongly implied that feasibility has an economic component. For example, the Commission held in Sherwin- Williams Co., 11 BNA OSHC 2105, 2110 (No. 14131, 1984), that the very nature of established federal standards adopted under section 6(a) required that the term "feasible" be construed to encompass both economic and technological feasibility. In United States Steel Co., 12 BNA OSHC 1692, 1701 (No. 79-1998, 1986), the Commission construed the term "feasible" as it has been used in cases arising under the general duty clause, Section 5(a)(1) of the Act, 29 U.S.C. § 654(a)(1), in the same way it construed the word in Sherwin-Williams -- to permit a showing of economic infeasibility by the employer.[[6/]]

Moreover, the federal courts of appeals also agree that an employer may defend on economic feasibility grounds. See Donovan v. Williams Enterprises, 744 F.2d 170 (D.C. Cir. 1984) ("The impossibility (or infeasibility) defense encompasses both technological and economic infeasibility"); Faultless Division, Bliss & Laughlin Industries, Inc. v. Secretary of Labor 674 F.2d 1177, 1189 (7th Cir. 1982) (financial imperilment constitutes defense of economic infeasibility); Southern Colorado Prestress Co. v OSHRC, 586 F.2d 1342, 1351 (10th Cir. 1978) (economic infeasibility a defense).

The opposite conclusion in the Judge's Order seems to have been based on two incorrect foundations.

The Judge first stated that the requirement that established federal standards be adopted under Section 6(a) was in effect a "Congressional adoption of those regulations . . . whether [they] fully met the new definition of occupational safety and health standards in section 3(8) of the Act, or not." The Judge's reasoning leads to an absurdity. if the congressional adoption means that no economic infeasibility defense can be made, it would with equal illogic lead to the conclusion that not even a technological infeasibility defense exists. Moreover, the Commission and the courts quite evidently disagree with the Judge's theory that the definition of an "occupational safety and health standard" in Section 3(8) does not apply to a Section 6(a) standard. The courts and the Commission have hold that Section 6(a) standards using the word "hazard" must be construed to apply the "significant risk" test that the Supreme Court derived from Section 3(8). See Kastalon, Inc., 12 BNA OSHC 1928, 1937 (No. 79-3561, 1986) (citing cases), applying to a Section 6(a) standard the "significant risk" test extracted from Section 3(8) by the Supreme Court in Industrial Union Department v. American Petroleum Institute, 448 U.S. 607, 642, 8 BNA OSHC 1586, 1598 (1980). [[7/]] Resolving the issue would, in any event, address an important issue of law or policy, for it would resolve whether Section 6(a) standards -- the standards adopted with the least forethought and scrutiny of any OSHA standards -- are not subject to the minimal requirements that all other OSHA safety standards are subject to. See National Grain & Feed Association v. OSHA, 866 F.2d 717, 728 (5th Cir. 1989) (Section 6(b) safety standards and 6(c) emergency temporary standards are constrained by Section 3(8); health standards are constrained by Section 6(b)(5)'s own economic feasibility requirement).

The Judge's second basis in equally fallacious. The Judge held that the industry-wide infeasibility test adopted by the D.C. Circuit in United Steelworkers v. Marshall, 647 F.2d 1189 (D.C. Cir. 1980), was based on the feasibility language in Section 6(b)(5) and is, therefore, not applicable to standards adopted under Section 6(a). First, this overlooks that there are other sources for an infeasibility defense. The Commission in Dun-Par derived the infeasibility defense from the very nature of Section 6(a) standards. Second, the Commission and the courts agree that Section 6(b)(5) feasibility concepts are relevant to Section 6(a) standards. In Dun-Par, the Commission stated that "One court has inferred from section 6(b)(5) that all OSHA standards are implicitly constrained by the feasibility requirement." 12 BNA OSHC at 1955 (emphasis added), citing A.F.L.C.I.O. v. Brennan, 530 F.2d 109, 121, 3 BNA OSHC 1820, 1828 (3d Cir. 1975), and Atlantic & Gulf Stevedores, Inc. v. OSHRC, 534 F.2d 541, 549-550, 551-552 & n. 13, 4 BNA OSHC 1061 (3d Cir. 1976) (Commission may consider whether Section 6(a) established federal standard is invalid as economically infeasible) [[8/]]

The above discussion makes clear that the Judge has placed himself in conflict with case law from both the Commission and the federal appellate courts. He has, moreover apparently placed himself in conflict with at least some of his follow Administrative Law Judges, two of whom have without reservation considered a defense of economic infeasibility.[[9/]]

There is, therefore, a need for the Commission to state its view on this important issue with clarity and authority.

C. Interlocutory Review May Materially Expedite. The Final
     Disposition of the Proceeding

According to Commission Rule 2200.73(a), Falcon need not show that immediate review will materially expedite the final disposition of this Case; Falcon need show only that it "may"do so. Nevertheless, there can be little doubt that interlocutory review will speed up the resolution of this case.

A ruling favorable to Falcon will avoid a truncated and utterly pointless trial and an unnecessary retrial. As matters now stand, Falcon's attempts to introduce evidence of economic infeasibility would presumably be rejected by the Judge as irrelevant. Falcon represents that this evidence would likely include the testimony of several expert witnesses. Then, if the Commission reverses the Judge on discretionary review and holds that the evidence is relevant because economic infeasibility is a defense, the case would have to be remanded and retried at great expense to the Commission, the Secretary, and Falcon -- a relatively small family-owned business.[[10/]]

If, on the other hand, interlocutory review is granted, a remand and retrial can be avoided. Moreover, Falcon respectfully suggests that a favorable ruling by the Commission on the legal issue might perhaps promote the prospects for an amicable settlement and thus make any trial unnecessary.

Accordingly, interlocutory review should be granted.

Respectfully submitted,

Robert C. Gombar
Stephen C. Yohay, Esq.
Arthur G. Sapper, Esq.

JONES, DAY, REAVIS & POGUE
COUNSEL FOR FALCON STEEL
COMPANY, INC.

7191s

SECRETARY OF LABOR,

Complainant,

v.

FALCON STEEL COMPANY, INC.,

Respondent.

Docket Nos.: 89-2883

and 89-3444

(Consolidated)

ORDER DENYING RESPONDENT'S MOTION TO COMPEL
ANSWERS TO CERTAIN INTERROGATORIES, PRODUCTION
Of CERTAIN DOCUMENTS AND REQUEST FOR A HEARING ON MOTIONS

I Background

On June 9, 1990, Respondent, Falcon Steel Company, Inc. ("Falcon"), moved for an order compelling the Complainant, Secretary of Labor ("Secretary"), to respond to certain interrogatories and to produce certain documents. In addition, Falcon requested leave to depose certain individuals and for a hearing on its motions.

Falcon served its First interrogatories and Document request in No. 89-3444 on May 11, 1990. The Secretary's objections were received by Falcon on May 24, 1990. Falcon filed its notion to compel on June 5, 1990. The Secretary filed a response to the motion to compel on June 25, 1990. On the same day, Respondent filed a supplement to its notion and on June 26, 1990, filed a reply to the Secretary's response. A telephone conference was held on June 29, 1990, resulting, inter alia, in an order being issued on that date granting leave to the Secretary to file a supplement to the June 25, 1990, response to the motion. All of the pleadings have now been considered.

Falcon's interrogatories number 12 and 13, respectively, requested that the Secretary identify certain OSHA personnel responsible for the pending proposed revisions of Subparts M and R, of 29 C.F.R., Part 1926. Similarly, Falcon's requests number 33 and 34 of its request for production of documents sought, respectively, all documents relating to OSHA's proposed rulemaking for Safety Standards for Fall Protection in the Construction Industry and OSHA's plan to propose revisions to Subpart R of 29 C.F.R., Part 1926.

Accompanying its Motion to Compel, Falcon also seeks leave under Commission Rule 56, 29 C. F. R. § 2200.56 (1988), [[1]] to depose the two individuals to be identified in the Secretary's responses to interrogatories number 12 and 13; a representative of the contractor who prepared an economic analysis of the proposed revisions to the structural steel erection standards; and a representative of OSHA knowledgeable about the agency's proposals and plans regarding standards affecting the steel and concrete construction industries. [[2]]

By objecting to the discovery requests, responding to the Motion to Compel, and objecting to the request for leave to depose certain persons, the Secretary has placed in issue the propriety of those requests. The Secretary's stated objections to the requests are based on the argument that the materials sought are not relevant.

II Propriety of Falcon's Discovery Requests.

Falcon, quite clearly states in its June 8, 1990,motion to compel that it "intends to prove in this case that 29 C.F.R. § 1926.105(a) is generally infeasible for the high-rise steel erection industry." (Emphasis in original.)

General industry-wide infeasibility of compliance with an occupational safety and health standard adopted of such pursuant to section 6(a) of the Occupational Safety and Health Act of 1970, 29 U.S.C. § 655(a), is not a valid defense to a citation.

It follows that evidence relating to that proposition is not relevant and would not be admissible in this enforcement proceeding. Thus, Falcon's motion to compel, as to the objected to discovery requests [[3]] is not reasonably calculated to lead to the discovery of admissible evidence. The Secretary's objections on the grounds of "relevancy" are sustained.

The standard allegedly violated by Falcon, 29 C.F.R. § 1926.105(a) (1989), is a standard adopted by OSHA under section 6(a) of the Act. As the Commission pointed out in Dun-Par Engineered Form Co., 12 BNA OSHC 1949, 1953 (No. 79-2553, 1986), rev'd on other grounds, 843 F.2d 1135 (8th Cir. 1988), Congress, with some exceptions not relevant here, required the Secretary to adopt national consensus standards and established federal standards as occupational safety and health standards quickly and without the public notice, comment and rulemaking provided for by section 6(b) of the Act, 29 U.S.C. § 655(b). The Congressional mandate to adopt pre- existing regulations while bypassing the rulemaking procedures of section 6(b) of the Act was, in effect, a Congressional adoption of those regulations as occupational safety and health standards whether the pre-existing regulations fully met the new definition of occupational safety and health standards in section 3(8) of the Act, or not.

Even if Falcon is correct in maintaining that section 3(8) of the Act incorporates some sort of feasibility test for the validity of a safety standard similar to that imposed by section 6(b)(5) of the Act for the adoption of standards dealing with toxic materials, such a test is not applicable to standards adopted under section 6(a) of the Act.

The formulations by courts of tests for economic feasibility such as United Steelworkers of America v., Marshall, 647 F.2d 1199 (D.C. Cir. 1980) ("Steelworkers"), contemplated their application in section 6(b)(5) standards cases. Indeed, the Steelworkers court considered section 6(b)(5) of the Act to be "the source of the feasibility requirement." 647 F.2d at 1270, n. 119. Moreover, the Steelworkers court contemplated that such "general infeasibility" would be demonstrated through an employers "particular circumstances." Id.

Finally, Falcon reviews in some detail OSHA's current rule making activity with regard to the high-rise steel and concrete construction industries. OSHA is in the process of rulemaking regarding fall protection for concrete construction and has announced that it is about to commence another rulemaking regarding fall protection in steel erection. Public hearings to to the proposed rulemaking for concrete construction have been held and the rulemaking record in closed. In anticipation of public rulemaking proceedings OSHA has circulated to interested parties an informal draft of its proposal regarding steel erection. Falcon has a copy of this draft.

The pending proposals regarding fall protection in both concrete construction and steel erection are presently undergoing the notice, comment and public rulemaking procedures required by section 6(b) of the Act. These activities are providing the opportunity for interested parties to make a record as to industry wide economic feasibility of compliance as envisioned by many of the court decisions. Thus, to the degree that Falcon claims that it is generally infeasible for the steel erection industry to erect safety nets, the proper forum lies in the rulemaking proceedings.

Accordingly, Falcon's motion to compel the Secretary to answer interrogatories 12 & 13 and to compel the Secretary to produce the documents requested in its requests 33 & 34 is DENIED.

Inasmuch as Falcon's request for leave to depose individuals involved with the ongoing rule-making activities having nothing to do with conditions at the cited work site, it too is DENIED.

III Falcon's Request for Files Relating to Other Contractors

As in Docket No. 89-2883, Falcon requests the Secretary to produce her files relating to citations issued to other contractors on the job site in question here. For the reasons set forth in the order of May 30, 1990, Falcon's request has not been shown to be reasonably calculated to lead to the discovery of admissible evidence.

Accordingly, Falcon's motion to compel the Secretary to produce the documents requested in its request 12 is DENIED.

IV Falcon's Request for a Hearing on the Motions

In light of the above dispositions, development of a factual record at this stage of the proceedings is unnecessary. Accordingly, Falcon's request for a hearing relating to discovery matters is DENIED.

Michael H. Schoenfeld
Judge, OSHRC

Dated: July 3, 1990
Washington, D.C.

FOOTNOTES:

[[1/]] See, e.g., Complainant's Response to Respondent's Request for Production of Documents in No. 89-2883, served April 24, 1990, regarding Request Nos. 1, 11 and 14 (claiming deliberative process privilege).

[[2/]] See, e.g., Complainant's Objection to Respondent's Request for Production of Documents in No. 89-3444, served May 24, 1990, with respect to Request No. 29.

[[3/]] See Williams Enterprises, Inc., 1989 Lexis 70 (No. 88-619) (Chief Judge Tenney) (discussion and findings on "economic feasibility"); Williams Enterprises, Inc., 1989 Lexis 75 (No. 87-1871) (Deputy Chief Judge Sommer) (similar).

[[4/]] Formally known as the Contract Work Hours and Safety Standards Act, 40 U.S.C. § 327 et seq.

[[5/]] 41 U.S.C.§§ 35-45.

[[6/]] In U.S. Steel, the Commission stated:

Although it might seem to us that shutting down "K" vessel might substantially interfere with U.S. Steel's operations, U.S. Steel made no attempt to rebut the Secretary's evidence or to show. that it was economically infeasible to interrupt casts in order to remove the water, or to shut "K" vessel down until the water was removed. See Sherwin-Williams Co., . . . .

[[7/]] See also Anoplate Corp., 12 BNA OSHC 1678, 1681 (No. 80-4109, 1986) (to same effect).

[[8/]] The Judge also refers obliquely to the statement in Steelworkers that an economic infeasibility defense would be demonstrated through an employer's "particular circumstances". The implication is that Falcon will not attempt to prove anything about its own particular circumstances. Falcon never said that it would not attempt to introduce evidence about its own circumstances. On the contrary, Falcon expects to show that the industry-wide infeasibility of perimeter nets applies equally well to it, for it is a typical member of that industry. Second, nothing in Steelworkers says that economic infeasibility can be proven only in the ways the court outlined.

[[9/]] See Williams Enterprises, Inc., 1989 Lexis 70 (No. 88-619) (Chief Judge Tenney) (discussion and findings on "economic feasibility"); Williams Enterprises, Inc., 1989 Lexis 75 (No. 87-1871) (Deputy Chief Judge Sommer) (similar).

[[10/]] It is worth noting that the Commission has long favored allowing an employer to introduce evidence supporting a claim or impossibility or infeasibility so that the merits of the legal argument can be evaluated on the basis of a developed factual record. See W.C. Sivers, 1 BNA OSHC 1074 (No. 239, 1972) (impossibility not yet held to be a defense; Commission would give employer "the opportunity to present the [impossibility] defense without venturing any opinion at this time concerning the completeness of the defense, if established under the Act.").

[[1]] Rules of Procedure of the Occupational Safety and Health Review Commission, 29 C.F.R. § 2200.1- .212 (1988), as amended, 55 Fed. Reg. 22780 83 (June 4, 1990) ("Rules").

[[2]] Falcon's interrogatories 12 & 13, requests 33 and 34 for production of documents, and requests for leave to take depositions may be referred to as the "objected to discovery requests." Other portions of the motion to compel have been withdrawn. Similarly, the Secretary has withdrawn her argument that the motion to compel was untimely filed. See, order of June 29, 1990. Falcon's request for leave to take depositions has not been challenged as untimely.

[[3]] See footnote 3, supra.