Raymond J. Donovan, Secretary of Labor, Petitioner/cross-Respondent v. Red Star Marine Services, Inc., Respondent/cross-Petitioner

Citations: 739 F.2d 774; 1985 A.M.C. 46; 11 OSHC (BNA) 2049; 1984 U.S. App. LEXIS 20653Docket: 728

Court: Court of Appeals for the Second Circuit; July 10, 1984; Federal Appellate Court

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The case involves a jurisdictional dispute between the Occupational Safety and Health Administration (OSHA) and the Coast Guard regarding the working conditions of employees aboard uninspected vessels. The United States Court of Appeals, Second Circuit, reviewed cross-petitions from Raymond J. Donovan, Secretary of Labor, and Red Star Marine Services, Inc., stemming from an Occupational Safety and Health Review Commission decision. The primary issues were whether OSHA had jurisdiction over the working conditions of employees on uninspected vessels in navigable waters, and the validity of ex parte warrants obtained by OSHA for inspections.

The court ruled that OSHA does have jurisdiction over the working conditions of employees on uninspected vessels, thereby validating the ex parte warrants issued for the inspections. This decision counters the Commission's earlier stance that the Coast Guard held exclusive jurisdiction over such matters, following precedent set in Dillingham Tug & Barge Corp., which cited the Coast Guard's regulatory authority over seamen on both inspected and uninspected vessels. The case was remanded for further proceedings consistent with the appellate court's findings.

The facts indicate that Red Star operates tugboats, including the "STAMFORD," which was inspected based on employee complaints and after Red Star denied access for a voluntary inspection. OSHA cited Red Star for violations related to excessive noise and failing to administer a hearing conservation program. Red Star contested these citations but was upheld by the Administrative Law Judge (ALJ) and the Commission, leading to the current appeal.

A second hearing was conducted on February 9, 1983, following a remand order, primarily featuring the testimony of a Coast Guard officer. Based on this testimony, relevant regulations in 46 C.F.R. Chapter I, and the Commission's ruling in Dillingham, the Administrative Law Judge (ALJ) reversed a previous decision, determining that the Coast Guard held jurisdiction over the matter, thereby precluding OSHA from enforcing its regulations. The Commission did not review the Secretary's petition for discretionary review, resulting in the ALJ's decision becoming final on June 23, 1983, under section 12(j) of the OSH Act. The Secretary is seeking judicial review regarding the ALJ's ruling that OSHA lacks jurisdiction over "seamen" on uninspected vessels. Red Star, in a cross-petition, challenges the validity of the ex parte warrant upheld by the Commission. 

The OSH Act applies broadly to employment across various jurisdictions, with a notable exemption for private employers when another federal agency has authority over occupational safety or health. The Commission annulled OSHA's citation against STAMFORD for violating noise regulations, citing the Coast Guard's comprehensive regulatory authority over uninspected vessels on navigable waters. 

The standard of review for factual determinations by the Commission is based on substantial evidence, while the court can evaluate legal conclusions' compliance with the law. Judicial interpretation must respect agency interpretations of statutes, as established in prior case law. The jurisdictional question hinges on the interpretation of section 4(b)(1) of the OSH Act, which exempts working conditions regulated by other federal or state agencies from OSHA's purview.

A correct interpretation of section 4(b)(1) requires that the Coast Guard actually exercises its delegated statutory authority. While both parties agree that the Coast Guard has extensive authority and is responsible for maritime safety under Title 14 and Title 46 of the United States Code, it is undisputed that the Coast Guard has not exercised its authority to regulate noise hazards on uninspected vessels, such as the STAMFORD. Historically, the Coast Guard's regulatory scope over uninspected vessels has been limited to life-saving and fire-fighting equipment, with no additional authority granted by Congress despite requests for it. The distinction between "uninspected" and "inspected and certificated" vessels is clear, as regulations for inspected vessels are more comprehensive. No provisions in federal law grant the Coast Guard authority to regulate noise hazards on uninspected vessels, although a recommendation addressing noise control was issued in a circular directed at inspected vessels after the events leading to this litigation. The key legal question arises regarding whether the Coast Guard’s authority in maritime matters preempts OSHA’s authority to regulate hazards on vessels not covered by the Coast Guard.

The Secretary acknowledges that the Coast Guard's extensive regulations concerning safety and health on inspected vessels remove OSHA's jurisdiction over those vessels. However, the Secretary argues that the Coast Guard has not sufficiently exercised its regulatory authority regarding the working conditions, specifically noise hazards, for "seamen" on uninspected vessels to warrant an exemption from OSHA regulations. Red Star contends that the Coast Guard has exercised jurisdiction over health and safety matters affecting its "seamen" aboard the uninspected vessel STAMFORD, asserting that preemption could occur even with less stringent regulations than OSHA.

The document indicates that noise qualifies as a "working condition" under section 4(b)(1), and the Coast Guard has not adequately addressed noise concerns on uninspected vessels, suggesting that OSHA regulations should apply. The text references inconsistent interpretations of section 4(b)(1) among various courts. In particular, the court in Marshall v. Northwest Orient Airlines clarified that section 4(b)(1) does not eliminate OSHA's jurisdiction based solely on hypothetical conflicts or provide broad exceptions for entire industries; actual regulatory power must be exercised for preemption to occur. 

Other circuits support the view that "exercise" implies a tangible assertion of regulatory authority, rather than mere possession of authority, and that section 4(b)(1) was not intended to create industry-wide exemptions based on limited regulatory actions. The Fourth Circuit's ruling in Southern Ry. Co. v. OSHRC reinforces this interpretation, emphasizing legislative intent. Red Star's claim of an industry-wide exemption for "seamen" due to the Coast Guard's pervasive regulation is rejected, as the cited authorities do not adequately differentiate the regulatory extent between inspected and uninspected vessels. The Fifth Circuit's decision in Donovan v. Texaco, Inc. noted a conflict between OSHA and Coast Guard regulations, affirming that the potential overlap in protective measures was contrary to the intention of Congress in enacting section 4(b)(1) of OSHA.

The Texaco opinion references the Fifth Circuit case Clary v. Ocean Drilling & Exploration Co., which upheld Commission precedent and reached a conclusion independent of section 4(b)(1) regarding a Jones Act suit. In Clary, the plaintiff's claim of negligence per se based on OSHA violations was dismissed because the court determined that the relevant OSHA regulations did not apply to the circumstances of the plaintiff's injury. The opinion further cites Taylor v. Moore-McCormack Lines, which clarified that the Coast Guard is responsible for the safety of seamen, while the Department of Labor oversees longshoremen under OSHA, establishing exclusive responsibilities for each agency. However, the Taylor case did not address the regulatory gaps for employees on uninspected vessels, limiting its precedential value. Red Star also cites Barger v. Mayor, which indicates that employees under the jurisdiction of other federal agencies are excluded from OSHA regulations. The Labor Department's regulation restates section 4(b)(1) of the OSH Act, reinforcing that mere statutory authority is insufficient to preempt OSHA’s jurisdiction. The ruling asserts that noise on uninspected vessels is a working condition not governed by Coast Guard regulations, contradicting the Dillingham Commission's view that a distinction between inspected and uninspected vessels was unwarranted. The court argues that isolated Coast Guard safety regulations do not equate to a sufficient exercise of authority to displace OSHA’s jurisdiction over working conditions aboard uninspected vessels, as these regulations primarily address vessel seaworthiness rather than employee working conditions. Examples of such incidental regulations are cited, including those related to petroleum gas, ventilation, flame control, and fire extinguishers, which do not focus on working conditions.

Congress intended for all workers, including those aboard uninspected vessels, to be protected under major safety legislation like the OSH Act, emphasizing the need for safe and healthful working conditions. The OSH Act should be interpreted to maximize protection for industrial workers, particularly seamen, who have historically received special legislative protections due to their vulnerable working conditions at sea. The existing regulatory framework from the Coast Guard only addresses limited aspects of working conditions on uninspected vessels, which means it does not comprehensively regulate these conditions. Therefore, OSHA retains the authority to regulate the working conditions of employees on uninspected vessels, including addressing noise hazards.

Regarding the authority of the Secretary of Labor to obtain an ex parte warrant for inspections, the Secretary argues that the applicable regulation at the time permitted such warrants. This authority aligns with the overarching congressional policy to ensure safe working environments, granting the Secretary the power to enter and inspect workplaces for occupational hazards during regular working hours and at other reasonable times. The Secretary is also empowered to create necessary regulations to enforce this authority.

In 1971, regulation 1903.11 was enacted under section 8(g), mandating that a compliance officer report an employer's denial of access to the Area Director, who would then consult with the Regional Administrator and Solicitor to seek compulsory process. This regulation was later renumbered to 1903.4, with a slight amendment empowering the compliance officer to take necessary actions, including compulsory process. Following this, OSHA developed Compliance and Field Operations Manuals, which instructed compliance officers to obtain inspection warrants without prior notice to employers, except in unusual circumstances. In 1976, the manual was revised, retaining the no-advance-warning policy but modifying terminology from "warrant" to "compulsory process."

The Supreme Court case Marshall v. Barlow's, Inc. (1978) addressed the constitutionality of OSHA's warrantless inspections under regulation 1903.4, ruling that such practices violated the Fourth Amendment, although the OSH Act does not explicitly require search warrants. The current case involves an inspection conducted under an ex parte warrant, rendering extensive discussion of warrantless inspections unnecessary. The Court's comments suggested that "compulsory process" did not include ex parte warrants, a view later acknowledged by federal courts as dicta. In Cerro Metal Products v. Marshall (1979), the district court concluded that the Secretary lacked authority to seek ex parte warrants based on the Supreme Court's interpretation. In response, the Secretary amended regulation 1903.4 in December 1978 to explicitly include the seeking of ex parte warrants as "compulsory process," doing so without adhering to the notice and comment requirements of the Federal Administrative Procedure Act, citing an exemption for interpretative rules.

District Judge Pollak ruled in Cerro Metal that a regulation amended on December 22, 1978, was a substantive regulation that would "substantially affect" rights, rendering it invalidly promulgated. The Third Circuit Court of Appeals affirmed this decision, with the majority opining that the district court correctly identified the regulation as a legislative rule disguised as an interpretative rule, a view supported by the Fifth Circuit in subsequent cases. Red Star argued that the regulation was intended to allow ex parte warrants and that the Supreme Court's comments in Barlow's were non-binding dicta, while OSHA contended that both the Third Circuit and District Court misinterpreted Barlow's. The Supreme Court had only ruled that nonconsensual warrantless inspections by OSHA violated the Fourth Amendment, without denying OSHA's authority to seek ex parte warrants. The Court indicated that a regulation allowing for ex parte warrants would fall within OSHA's statutory power and criticized the adoption of regulation 1903.4 as unnecessary. The confusion arose from the interpretation of "compulsory process," which the Supreme Court did not definitively state excluded ex parte warrants. The dissenting opinion from Chief Judge Seitz in Cerro Metal maintained that "compulsory process" should be interpreted to include ex parte warrants. The current opinion chooses not to adhere to the Supreme Court's dicta, asserting that a different interpretation is justified.

The removal of section 2(f) from the 1976 manual required compliance officers to obtain the owner's permission before conducting inspections, but it did not eliminate the possibility of using ex parte warrants, as indicated by the retention of section 2(i) concerning surprise inspections. This interpretation aligns with Chief Judge Seitz's analysis of the Supreme Court's dicta in Barlow's, especially in light of OSHA's litigation strategy. Other circuit courts, including the Seventh and Tenth Circuits, have upheld OSHA's authority to seek ex parte warrants, asserting that the 1978 amendment was necessary for the Secretary to continue such practices. The Seventh Circuit, in Rockford Drop Forge Co. v. Donovan, affirmed the validity of both the amendment and the warrant, stating that the Secretary acted on the Supreme Court's suggestions. The Tenth Circuit similarly recognized the Secretary's authority under the 1978 amendment as an interpretative rule. Although there is a belief that the Secretary did not need to amend regulation 1903.4 to seek ex parte warrants, the amendment reflects the Secretary's consistent position. The distinction between interpretative and substantive rules, largely undefined by Congress, hinges on whether a rule alters existing rights and obligations. The analysis indicates that the 1978 amendment clarified existing authorities regarding ex parte warrants without altering any substantive rights or duties under the OSH Act. Past court decisions support the view that the Secretary has always included ex parte warrants within "compulsory process," reflecting an intention to maintain this authority despite changes in the manual's wording to address unconstitutional warrantless inspections.

OSHA was authorized to seek ex parte inspection warrants during the inspection of the STAMFORD, and these warrants were deemed valid. The court concluded that noise constitutes a "working condition" and, since the Coast Guard does not oversee working conditions on uninspected vessels in navigable waters, OSHA retains jurisdiction in these cases. Consequently, the court reversed the order on appeal that denied OSHA's jurisdiction. Additionally, it affirmed the validity of the ex parte warrants issued by OSHA. The case is remanded for further proceedings in line with this ruling. The classification of vessels under Title 46 distinguishes "uninspected vessels," which are not subject to Coast Guard inspection, as defined in 46 U.S.C. Sec. 2101(43). A Memorandum of Understanding between the Coast Guard and OSHA clarifies that the Coast Guard regulates working conditions for seamen on inspected vessels, limiting OSHA's enforcement capabilities in that context.