On October 13, an en banc Eighth Circuit Court of Appeals, in Perez v. Loren Cook Company, denied the Secretary of Labor’s petition for review of an order handed down by the Occupational Safety & Health Review Commission (OSHRC). In doing so, the court provided an in-depth discussion of circumstances where the Secretary (and by extension, OSHA) is not entitled to deference in his (or its) interpretation of OSHA regulations.
Loren Cook Company is an industrial manufacturer of air circulating equipment. In May 2009, one of Loren Cook’s lathe operators was killed when a 12-pound rotating metal workpiece broke free from the lathe, flew out of the machine, and struck the operator in the head. The ensuing OSHA investigation resulted in the issuance of two citations, one of which included seven violations of 29 C.F.R. § 1910.212(a)(1), which the Secretary determined was violated by Loren Cook through its “failure to employ barrier guards to prevent the ejection of a workpiece from this kind of catastrophic breakdown of a lathe.” The fine assessed by the Secretary for these seven violations totaled $490,000.
In reviewing these citations, an Administrative Law Judge (ALJ) determined that § 1910.212(a)(1) only considers “routine risks of operation” and does not address “catastrophic failures” that result in the ejection of workpieces. The ALJ vacated the relevant citation, and OSHRC adopted the unmodified recommendation of the ALJ.
Subsequently, the Secretary petitioned the Eighth Circuit for review of OSHRC’s final order. A divided panel of the Eighth Circuit granted the petition for review and reversed OSHRC’s order. However, this panel decision was vacated by the court when it granted Loren Cook’s petition for rehearing en banc.
In denying the Secretary’s petition for review of OSHRC’s decision, the Eighth Circuit’s majority opinion focused almost entirely on the issue of whether the Secretary’s interpretation of § 1910.212(a)(1) was entitled to deference. The court first acknowledged that it “generally afford[s] substantial deference to the Secretary’s interpretation of his own regulations” (citing Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945)) (other citations omitted). However, the court quickly added that “deference to the Secretary’s interpretation is only appropriate when both the interpretation itself and the manner in which the Secretary announces the interpretation are reasonable” (citing Martin v. Occupational Safety & Health Review Comm’n, 499 U.S. 144, 157-58 (1991)). In summarizing the framework provided by precedent, the court announced it would evaluate the Secretary’s interpretation based on three considerations: (1) “fidelity to the text of the regulation itself”; (2) “consistency with prior interpretations”; and (3) “the possibility of unfair surprise.” Revealing its ultimate conclusion, the court then stated, “Under this framework, we conclude that the Secretary’s interpretation of section 1910.212(a)(1) is unreasonable and thus is not entitled to deference” (emphasis added).
Regarding textual reasonableness, the court determined that the catastrophic failure of a lathe and the ejection of a workpiece is unlike any category of hazard identified by the provision, concluding that the Secretary’s interpretation “strains a commonsense reading of the section” and “does not comport with the language of the regulation itself.” Concerning interpretational consistency, the court found the Secretary had “failed to produce a single citation, publication, or interpretation that could fairly be characterized as similar to the position the Secretary announced in the citation against Loren Cook,” adding that the Secretary’s interpretation was also inconsistent with OSHA’s machine-guarding guidance, “prevailing [judicial] opinion about the scope of this section,” and the Secretary’s (i.e., OSHA’s) prior machine guard investigation of Loren Cook in 2004.
Finally, regarding “unfair surprise,” the court acknowledged “strong reasons” for withholding deference from an agency when the agency has engaged in an extended period of acquiescence, noting that when “an agency’s announcement of its interpretation is preceded by a very lengthy period of conspicuous inaction, the potential for unfair surprise is acute.” Applying these principles to the Loren Cook citations, the Eighth Circuit emphasized the Secretary’s lack of response to a 1982 Second Circuit decision (Carlyle Compressor Co. v. Occupational Safety & Health Review Commission, 683 F.2d 673 (2d Cir. 1982)), noting the Secretary’s “fail[ure] to issue a single citation proclaiming his current interpretation, amend the language of the section to clarify the section’s scope, or issue interpretive guidance indicating his current position.” Thus, the court stated, the Secretary “appeared to agree with the Carlyle Court that the regulation did not require machine guarding to protect operators against the risk of the unexpected ejection of large workpieces.” The court found this “conspicuous inaction” was “amplified” by the Secretary’s history with Loren Cook, where OSHA had not previously cited the company for these issues despite its familiarity with the company’s operations. Therefore, the court concluded that the Secretary’s interpretation in the Loren Cook citation amounted to unfair surprise.
Thus, for these three reasons (textual fidelity, interpretive consistency, and unfair surprise), the Eighth Circuit concluded that the Secretary’s expansive interpretation of § 1910.212(a)(1) was not entitled to substantial deference.
In conclusion, the Loren Cook decision demonstrates the Eighth Circuit’s willingness to keep OSHA in line when they fail to remain consistent or principled in their interpretation of the regulations, and employers can be encouraged in the majority’s desire to protect companies from unfair surprise and ensure they receive fair warning of citable conduct. On a broader scale, this case provides relevant precedent for cases beyond the OSHA context, as the Eighth Circuit’s discussion of deference principles will apply to other federal agencies seeking to have their regulatory interpretations honored. Given the current climate of far-reaching agency intervention, the Loren Cook decision should be found useful for its broad applicability. A court’s deference determination can significantly impact the outcome of a dispute, and this case offers useful avenues for seeking to prevent the application of substantial deference to an agency’s proffered interpretation. At the same time, however, the outcomes of any future application of these principles by the Eighth Circuit will greatly depend on the factual circumstances of each case, and companies (and their attorneys) should note the four judges who dissented from the majority opinion and prepare accordingly if any of them appear on a future panel for this type of issue.