Hern Iron Works, Inc.

Plain-English summary

Hern Iron Works refused to provide its OSHA injury and illness records during an inspection conducted under an administrative search warrant. After earlier litigation over the warrant, an ALJ affirmed a willful record-access violation but reduced the Secretary's proposed $10,000 penalty to $200 because the violation had low gravity and Hern was a small company with reported losses. On review, the Commission rejected the Secretary's argument that his proposed penalties deserve controlling or substantial weight, holding that the Commission assesses penalties independently in contested cases. It agreed that the violation was low gravity and that Hern was a small employer. It also found that Hern lacked good faith, had a history of recordkeeping violations, and had not supplied enough financial evidence to support a major reduction. The Commission left the willful violation in place and increased the penalty to $5,000.

Decision snapshot

• Cited standard(s): 29 C.F.R. § 1904.7(a).
• Outcome: Modified. The willful record-access violation remained affirmed, and the penalty was increased from $200 to $5,000.
• Key point: The Commission determines contested OSHA penalties independently, using the statutory factors and the facts proved in the case.

Full text (OSHRC public release)

   OCCUPATIONAL SAFETY AND HEALTH REVIEW COMhdisSION
                              One Lafayette C8ntre
                        1120 20th Stmet, N.W. - 9th Floor
                           Washington, DC 200363419




                                       a
                                       l

SECRETARY OF LABOR, l
.

                  Complainant,

           v.
                                              OSHRC Docket No. 88-1962

HERN IRON WORKS, INC.,

                  Respondent.



                                    DECISION

BEFORE: FOULKE, Chairman and MONTOYA, Commissioner.
BY THE COMMISSION:
I. Introduction
In June 1987, pursuant to an administrative search warrant, a representative of the
Occupational Safety and Health Administration (“0354”) of the Department of Labor
sought to conduct an inspection of Hem Iron Works (“Hem”) under the Occupational
Safety and Health Act of 1970, 29 U.S.C. # 651-678 (“The Act”). Hem refused to honor
the warrant and, on July 25, 1987, filed a motion to quash the warrant. Shortly thereafter,
the Secretary of Labor sought an order of contempt against the company. On November
19, 1987, the United’States District Court of Idaho entered a contempt order which was
affirmed by the United States Court of Appeals for the Ninth Circuit on August 3, 1989.
In re Estubkhment Iic~n of Hem Iron Works,881 F.2d 722 (9th Cir. 1989). Hem was

fined $2000 and ordered to reimburse the Secretary’s litigation costs.
While the district court’s contempt order was pending on appeal, the Secretary again
attempted to inspect Hem’s facility. Initially, Hem refused to allow the inspection. The
next morning, however, the compliance officer returned with a copy of the 1987 warrant.
The compliance officer asked Mr. Hem, the company president, to produce the facility’s
 2

OSHA 200 log of injuries and illnesses and the OSHA 101 forms (SupplementaT records
of injuries and illnesses). After consulting with his attorney, Mr. Hem refused to produce
the forms.
& a result of Hem’s refusal to produce the forms, the Secretary issued a citation for
willful violation of 29 C.F.R. 0 1904.71 and proposed a penalty of $lO,ooO~ Hem contested
the citation and a hearing was held before Judge Benjamin Loye. On October 25, 1989,
Judge Loye issued his decision and order vacating the citation on the grounds that the

inspection was based neither on Hem’s consent nor on a valid warrant. The Secretary filed
a petition for review with the Commission, but the petition was not granted3. The Secretary
subsequently appealed Judge Loye’s decision to the Ninth Circuit, which reversed the judge
and held that the inspection was properly conducted pursuant to the 1987 warrant. D&v.
Hem Iron Woks, 937 F.2d 612 (9th Cir. 1991). The matter was remanded to the
Commission with instructions to reinstate the citations and conduct appropriate proceedings.
The Commission remanded the matter to Judge Loye who issued a decision afbming
a willful violation of the cited standard on January 9, 1992. In finding the violation willful,
Judge Loye rejected Hem’s argument that it had made a good faith decision not to comply
with the district court’s order allowing the inspection because it believed that the order

‘The relevant provision of the cited standard is 3 1904.7(a) which states:

    9 1904.7 Access to ruads.

    (a) Each employer shall provide, upon request, records provided for in 93 1900.2,1904.4, and
    1904.5, for inspection and copying by any representative of the Secretary of Labor for the
    purpose of carrying out the provisions of the act, and by representatives of the Secretary of
    Health, Education, and Welfhre during any investigation under section 20(b) of the act, or
    by any representative of a State accorded jurisdiction for occupational Wety and health
    inspections or f6r statistical compilation under sections 18 and 24 of the act.

*Approximately a week after OSHA attempted to execute the 1987 warrant, Hem filed suit in district court
seeking declaratory judgment and injunctive relief on the ground that the 1987 warrant was stale and
unenforceable. After Hem’s motion for a preliminary injunction was denied, Hm Zrm Woks,Zx v.
McLaughlin, 198’74990 CCH OSHD ll28,310 (D. I&ho, June 13, MB), Hem allowed the inspection. That
inspection resulted in the issuanceof citationsfor wiUfU failureto record injuries on the same OSHA 200
form that Hem refused to turn over here. These citations were recently af!firmed by the Commission. Hm
Iron Works, Inc., 16 BNA OSHC 1206, 1993 CCH OSHD ll30,046 (NO. 89433, 1993) (“Hm I").

3At the time the Secretaryfiled his petition, the Commission had no members.
 3

would be overturned on appeal. Judge Loye also rejected Hem’s argument that it held a .
good faith belief that, based on statements made by the compliance officer, it could produce
the requested documents as late as the informal conference without a citation being issued,
In determining an appropriate penalty under section 17(j) of the Act, 29 USC.
5 &5@‘j),4
Judge Loye found the gravity of the violation low because no employees were
exposedto a hazard as a result of Hem’s failure to provide the forms. The judge also noted
that the requested records had eventually been turned over. However, he concluded that
some penalty was appropriate because Hem’s willful delay in producing the records resulted
in “the needless expenditure” of OS-IA’s time and resources. Citing Colonid Craft
Repruductions, 1 BNA OSHC 1063, 1971-73 CCH OSHD 1 15,277 (No. 881, 1972), Judge
Loye held that, where necessary to best effectuate the purposes of the Act, consideration
must be given to modifying factors such as the financial stability of the employer. He noted
that the Act’s purposes are not sewed by the assessment of “destructive” penalties. Based
on his finding that Hem experienced a five-year net loss of $17,000 in the years prior to
1987, he found that Hem could not continue to sustain such large losses, inchding large
OSHA penalties, and remain in business. Accordingly, he concluded that the $10,000
penalty proposed by the Secretary was excessive and assessed a penalty of $200.

                                     II. Issues on Review
    On review, the Secretary takes issue with the judge’s decision to reduce the proposed

penalty based on Hem’s financial condition. He also proposes modifications to the .
Commission’s authority to assess penalties. We first consider the basis of that authority.
III. Discussion
A. Statutory Authority to Assess Penalties
The Secretary complains that the Commission lacks his wide-ranging perspective on
the role of penalties under the Act as well as a systematic basis for assessing penalties.

4Section 17(j) provides:

             The Commission shall have authority to assessail civilpenaltiesprovided in this
    section, giving due consideration to the appropriateness of the penalty withrespectto thesize
    of the business of the employer being charged, the gravity of the violation, the good faith of
    the employer, and the history of previous violations.

4

However, his basic argument is that the Supreme Court’s reasoning in Martin V. OSHRC
(CFH Steel m), 499 U.S. 144 (1991) (“CFkl”) supports a conclusion that his penalty
proposals are entitled to “substantial weight” from the &mission. He contends that
because the weight to be given each of the statutory criteria is a policy decision, his
proposed penalties should not be recomputed in the absence of an express finding that they
are unreasonable or that the statutory factors have not been met.
In CF&I, the Court had to determine whether the courts should defer to the
interpretation of the Commission or the Secretary in the absence of any clear Congressional
statement on the issue. The Court concluded “that Congress did not intend to sever the
power authoritatively to interpret OSH Act regulations fkom the Secretary’s power to
promulgate and enforce them.” Id at 158. It held that a reviewing court should defer to the
Secretary’s reasonable interpretation of an ambiguous regulation. The Secretary contends
that both his standard-interpreting function and his penalty-proposing function are exercises
of delegated enforcement authority, suggesting of course that both desee the same
deference from the Commission. We disagree.
Unlike the controversy in CF&I over whose interpretation of an ambiguous standard
receives deference, the matter of penalty assessment is governed by the express language of
the Act. As the Secretary correctly notes, in the Act Congress gives the Secretary the power
to issue a document called a “proposed assasment of penalty.” Section lo(a) of the Act, 29
U.S.C. 0 659(a). However, in the event the citation and proposed penalty are contested, the
Act expressly grants to the Commission the sole authority to determine penalties:
The Commission shall have authority to assess all civil penalties
provided in this section, giving due consideration to the appropriateness of the
penalty with respect to the size of the business of the employer being charged,
the gravity of the violation, the good faith of the employer, and the history of
previous violations.
Section 17(j) of the Act, 29 U.S.C. 0 666(j). The Commission’s express authority to
determine the appropriate penalty in contested cases has been recognized from the earliest
days of the Act:
The Congressional intent is thus plainly manifested that the Commis-
sion shall be the final arbiter of penalties if the Secretary’s proposals are
contested and that, in such a case, the Secretary’s proposals become merely
advisory. We find no authority to the contrary.
 5

Brennan V. OWRC (Interstate G~w CO.), 487 F.Zd 438, 442 (8th Cir. 1973). The
Commission’s powtf has never been questioned by the courts that have discussed the issue:
congresS gave the OSHRC the authority to assess penalties.. l l The

    Secretary’s proposed penalty is effective only if not contested; once contested,
    the OSHRC can affirm the proposed penalty, modify it, vacate it, or direct
    other appropriate relief. The OSHRC thus determines the penalty de novo,
    considering the proposed penalty as, in fact, only a prowsal.

Cali$omiaStevedore and Balkst Co. v, OSHRC, 517 F.2d 986, 988 (9th Cir. 1975);’ see allro
Western Watepuofing v. Marshall, 516 F.2d 139, 145 (8th Cir, 1978) (the matter of penalty
is within the discretion of the Commission). Indeed, “[tlhere has newer been any question
that the Commission has the power to assess a penalty lower than or equal to the one
proposed by the Secretary.” M. Rothstein, Occupational Safety and Health LAW 6 338 (3d
ed. l99O).6 Moreover, the courts do not, as the Secretary would have it, review the
CornmissiOn’s penalty assessments for reasonableness. As the United States Court of
Appeals for the Eighth Circuit stated: “. . . [A] determination of how large or how small a
penalty should be imposed is an exercise of discretion by the Commission which will not be
disturbed by us in the absence of abuse.” Long Mfg. Co., N.C. v. OSHRC, 554 F.2d 903,
907-08 (8th Cir. 1977).
While the Secretary may seek a nationwide uniformity in penalty assessments as he
does in his interpretation of standards, the Commission recognized in its very first decision
that its mission is to determine the appropriate penalty based solely on the facts of each
case:

5We note that the case now under consideration arose in the Ninth Circuit.

90 supporthiscontention that his penalty proposals are, in efflect,entitled to a>ntrolling weight, the Secretary
also relies on statements in the legislative history of the Omnibus Budget Reconciliation Act of 1990, Pub. L
No. 101-508,~ 3101,104 Stat. 1388, 1388-29 (EM), relating to the amendment of section 17 of the Act.

Although we have no doubt that, by increasing the penalty structure of the Act sevenfold, Congress sought
to enhance the Secretary’s ability to use penalties to enforce the Act’s provisions, we fail to see how such an
intent would reduce the Commission’s authority to review the Secretary’s penalty proposals in contested cases.
To the contrary, these increased penalties heighten, rather than diminish, the importance of having a neutral
arbiter review the factual underpinnings of the proposed penalties. In light of overwhelming precedent
recognizing the Commission’s authority to assess penalties dc 1u)vo in contested cases, we are far more
persuaded by the fact that, when amending the penalty structure of the Act, Congress saw fit not to amend
those sections of the Act that grant the Commission express authority to assess penalties.
 6

      me Co-ion           & cognizant of the difliculties of the Secretary’s task in
      proposing an appropriak penalty in the many and diverse cases with which he
      is faced. The formula he has devised is an attempt to achieve uniformity in
      a decentralized operation. He has set out to achieve the impossible. He
      deserves credit for the attempt and this decision should not be interpreted as
      a criticism of his efforts.

      Nevertheless, in the opinion of the Commission, no matter how desirable
      uniform treatment of violations may be, the achievement of a just result in
      each case is the standard by which our deliberations must be guided.

Nacirema Opemting Co., 1 BNA OSHC 1001, 1003, 1971-73 CCH OSHD 1 15,032,
pp. 20,043.44 (No. 4, 1972).
The Secretary also relies on Moog hdus. v. FTC, 355 U.S. 411, 413 (1958) and NL
Indus., Inc. v. FTC, 901 F.2d 141, 144 (D.C. Cir. 1990). Neither of these cases provide
support for the Secretary. The Court in Moog rightly deferred to the FI’C’s specialized
judgment. It characterized certain questions as deserving “discretionary determination by
the administrative agency.” Here, despite the Secretary’s claims, the amount of the penalty
to be assessed is a discretionary determination by the Commission. In NL I-,
substantial deference was awarded to the agency assessing the civil penalty. Under the
statute cited there, the Secretary of Transportation was expressly empowered to assess
penalties. Under section 17(j) of the/ OSH Act, however, “[tlhe Commission shall have the
authority to assess all civil penalties.”
In addition to lacking support in the case law, the Secretary’s contention that his
penalty proposal should be adopted by the Commission unless the proposal is unreasonable .
runs directly contrary to the responsl%ility of the Commission to assess an appropriate
penalty based on its findings regarding the factors enumerated in section 17(j) of the Act.
The evaluation of those penalty factors are issues of fact, the resolution of which is the
exclusive province of the Commission. The Secretary does not consider that his view of the
penalty factors when he issued the citation will not always be the one that the Commission
judge adopts from the hearing or the view that the Commission gains from a review of the
record. Under the Secretary’s standard of review, the Commission apparently would be
prohibited from reducing or raising the penalty to more accurately reflect the facts of the
case.
 7
Finally, we note that in iti recent decision in Reich v. OSHRC (Erie Cok Cop.), 998
F.2d 134 (3d Ck 1993), the United States Court of Appeals for the Third Circuit, h
upholding the timmission’s authority to classiQ a violation as de minimis, stated:
me Commission has the statutory authority to af&m, modify, or vacate the
Secretary’s citation, or to direct other appropriate relief. Its action in reducing
the violation to de minimis status clearly falls within that grant of power. 77ze
reduction of the offense level is analqous to the power of a court to reduce a
criminal offense to a lesser level thun the one charged in an indictment. ntat
traditionalprocedurehas not been coruidkd to be a usurpation ofpmsecutorid
discretion, but rather a necessaryprerogative of the COW Moreover, the
Secretary does not challenge the Commission’s authority to reduce a serious
violation to non-serious status. 77zus,it appears thar it is mt the COt?lmi&n
that ir seeking to enhance its authority,but the Secretary who ir attempting to
enlarge his power at the ex~nse of the zteutrtralarbiter,’
Id. at 139 (emphasis added).
In our view, the logic applied by the Third Circuit to uphold the Commission’s
authority to find a violation de minimis applies equally to the Commission’s authority to
assess penalties.

           B. Did the Judge Err in His Penalty Assessment in this Case?
                             1. Arguments of the Parties
   The Secretary argues that the judge’s penalty assessment was unreasonably low and

constituted an abuse of discretion. He argues that, given Hem’s lack of good faith, none of
the section 17(j) factors’ justifies a reduction in the penalty.
The Secretary further argues that the judge also erred by holding that the violation
was one of low gravity. He contends that the OSHA 200 log is the cornerstone of the
information gathering system mandated by Congress and is used to identify high-hazard
industries for inspection targeting. He points out that, even during an inspection, the OSHA
200 and OSHA 101 can be scrutinized by the compliance officer to enable him to determine
the effectiveness of the employer’s safety and health program and to identify areas of
particular concern that warrant closer investigation.

‘See note 4.
 8
me Secretary also argues that the judge erred by considering Hem’s financial
condition as a basis for imposing a reduced penalty. He points out that Congress said
nothing about an employer’s ability to pay as being part of a section 17(j) penalty
calculation.8 To the contrary, the Secretary contends that Congress recognized and
accepted the proposition that certain unsafe, unhealthful business establishments could only
abate by shutting down. AFL-CIO v. Brennan, 530 F.2d 109, 123 (3d Cir. 1975).
Finally, the Secretary argues that, given Hem’s purposely obstructionist tactics, the
judge’s penalty assessment makes a mockery of the Act’s penalty scheme and does little to
deter intentional violations of the Act.
Hem contends that the judge correctly found the violation to be of low gravity. It
argues that the Secretary’s attempt to impose the maximum penalty stems from his desire
to punish Hem for its use of the administrative and judicial process to vindicate its
philosophical resistance to OSHA. Pointing to Hem I, in which the evidence established that
it had gross annual sales of $500,000, and a net worth of $50,000, Hem argues that, on a
proportional basis, the $13,000 penalties assessed in that case by the judge greatly exceed
penalties assessed against giant corporations such as Chrysler? It argues that the penalty
sought by the Secretary guarantees only financial ruin, not compliance with the Act.
2. Discussion
Section 17(j) of the Act, 29 U.S.C. 9 666(j), requires that when assessing penalties,
the Commission must give “due consideration” to four criteria: the size of the employer’s
business, gravity of the violation, good faith, and prior history of violations. JA. Jones Corwr.
Co., 15 BNA OSHC 2201, 2213-14, 1993 CCH OSHD II 29,964, p. 41,032 (No. 87-2059,
1993). These factors are not necessarily accorded equal weight. Generally speaking, the
gravity of a violation is the primary element in the penalty assessment. 7Ezity Ihdur., 15
BNA OSHC 1481, 1483, 1992 CCH OSHD 129,582, p. 40,033 (No. 88-2691, 1992). The
gravity of a particular violation depends upon such matters as the number of employees

81n comparison, the Secretary notes that penalties under the Federal Mine Safety and Health Act require
consideration of both “the appropriateness of such penalty to the size of the business of the operator charged”
and. “the effect on the operator’s ability to stay in business.” 30 USC. 9 820(i)

‘We note that Hem’s argument predated the Commission review of the judge’s decision in Hm I. In that
decision, the Commission assessed penalties of $9000.
 9

exposed, the duration of the exposure, the precautions taken against injury, and the
l&&c& that 81ly injury would result. L/L JOeS, 15 BNA OSHC at 2214, 1993 Cm

OSHD at p. 41,032.
We find that the Judge did not err in finding the violation to be of low gravity. me
Commission has held that recordkeeping violations are generally of low gravity because such
violations touch in only the most tangential way the factors that go to gravity: the number
of employees exposed to the hazard, the duration of exposure, whether any precautions have
been taken against injury, and the degree of probability that an accident would occur.
Caterpillar,Inc., 15 BNA OSHC 2153, 2178, 1993 CCH OSHD 1 29,962, p. 41,011 (No.
87922,1993). After he determined that the records at issue here were improperly kept, the
Secretary issued a citation against Hem that the Commission recently affirmed in part. In
that decision, the Commission found Hem’s failure to adequately maintain the required
OSHA forms to be of low gravity. Hem I, 16 BNA OSHC at 12lM7, 1993 CCH OSHD
at pp. 41,259&O. We find nothing in this record to warrant a finding that the f&ilure to turn
over records is of a higher gravity than the failure to adequately maintain them.
We find that no credit shall be given Hem for either good faith or history. Judge
Loye did not discuss Hem’s history of previous violations. However, in Hm I, id, at
121647, 1993 CCH OSHD at p. 41,259, the Commission found that in 1982 Hem was cited
for an other-than-serious violation of section 1904.6 for failing to retain the OSHA 200 and
its predecessors for five years. This demonstrates that Hem has a history of violating OSHA
recordkeeping requirements. Judge Loye found, and we agree, that in refusing to honor the .
Secretary’s warrant and allow the inspection of its records, Hem was not proceeding in good
faith.
In its brief, Hem argues that the Secretary is seeking to punish it for taking advantage
of administrative and judicial processes to vindicate its “philosophical resistance to OSHA”
While it is perfectly legitimate for an employer to use the judicial and administrative
processes to vigorously pursue its legal position, the legitimacy of that argument wanes when
the employer has exhausted those processes and, as was the case here, continues to resist
even after that resistance has resulted in its being held in contempt of court. We recognize
that, at the time of the attempted inspection, the district court’s contempt finding against
 10
Hem was being appealed b the Ninth Circuit. Rather than continue its refusal to honor the
wmm~ the loper mm of acfion for Hem would have been to allow the inspection and
then move to have any citation dismissed, had it won on appeal. See tie Indur., 15 BNA
OSHC 1579, 1582 n.4, 1992 CCH OSHD 129,662, p. 40,184 n.4 (No. 88-1545, 1992)
(consolidated), petition for reviewfiled, NO. 92-2559 (11th Cir. June 18, 1992). Had Hem
followed this procedure, it could have avoided the instant citation while fully preserving its
right to defend its position vis-a-vis the validity of the warrant. Accordingly, we view Hem’s
decision to continue to obstruct the Secretary from inspecting its records as indicative of a
lack of good faith.
We do not decide here whether the judge erred in considering Hem’s financial
situation as an aspect of its size when determining the appropriate penalty because Hem has
not provided the Commission with sufficient information to allow us to make such a
determination. The only evidence submitted in this case regarding Hem’s financial situation
consists of testimony by Mr. Hem that the company lost $17,000 over the five years prior
to 1987. On review, Hem also calls the Commission’s attention to Hem I, in which the
evidence established that Hem had gross annual sales of $500,000 and that the penalty
affirmed by the judge in that case amounted to over one-fourth of the company’s $50,000
net worth. 16 BNA OSHC at 1215, 1993 CCH OSHD at p. 41,258. On the basis of this
information, we are unable to draw any conclusions as to the financial health of Hem. The
evidence does show, however, that Hem had only fifteen employees at the time of the
citation, and on that basis we agree that Hem is a small employer.
Because we do not find that Hem is entitled to a large penalty reduction due to its
financial condition, dur consideration of the penalty factors in section 17(j) of the Act does
not support the judge’s assessment of a $200 penalty. As discussed earlier, we find that
Hem’s continual obstruction of the Secretary’s attempts to inspect its records was not
pursued in good faith. Additionally, Hem has a prior history of noncompliance with OSHA
recordkeeping requirements. In light of these factors, as well as the other penalty factors
set forth in section 17(j) of the Act, we find that the $200 penalty assessed by the judge
barely amounts to a ‘slap on the wrists.’ On the other hand, we find that the $10,000 penalty
proposed by the Secretary fails to consider the low gravity of the underlying violation and
 11

the small size of the employer. We therefore conclude that, in light of Hem’s history, lack
of good faith and small size, and the low gravity of the violation, a penalty of $5000 is
appropriate.
ICI:ORDER
For the reasons stated above, a penalty of $SOOOis assessed for Hem’s willful
violation of 29 C.F.R. 8 1904.7.

                                                       Edwin G. Foulke, Jr.
                                                       Chairman




                                                       Velma Montoya
                                                       Commissioner           ”     iY

Dated: February 18, 1994
 UNltEDSTATES
of AMERICA
OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION
One Lafayette Centm
1120 m Stmet, N.W. - 9th Floor
Washington, DC 20036-3419

                                     .
                                     b

SECRETARY OF LABOR, ..
..
Complainant, ..
..
v. .. Docket No. 884962
l
.
HERN IRON WORKS, INC., .b
l
.

         Respondent.                 ..
                                      ..



                        NOTICE OF COMMISSION DECISION

The attached decision by the Occupational Safety and Health Review Commission was issued on
Februarv 18,1994. ANY PERSON ADVERSELY AFFECTED OR AGGRIEVED WHO WISHES
TO OBTAIN REVIEW OF THIS DECISION MUST FILE A NOTICE OF APPEAL WITH THE
APPROPRIATE FEDERAL COURT OF APPEALS WITHIN 60 DAYS OF TECEDATE OF THIS
DECISION. See Section 11 of the Occupational Safety and Health Act of 1970, 29 U.S.C. 5 660.

                                              FOR THE COMMISSION                           .

Februarv 18, 1994
Date
Docket No. 88-1962

NOTICE IS GIVEN TO THE FOLLOWING:

Daniel J. Mick, Esq.
Counsel for Regional Trial Litigation
Office of the Solicitor, U.S. DOL
Room S4004
200 Constitution Ave., N.W.
Washington, D.C. 20210

Robert Friel, Esq.
Associate Regional Solicitor
Office of the Solicitor, U.S. DOL
1111 Third Avenue, Suite 945
Seattle, WA 98174

Harvey Richman, Esq.
Attorney At Law
111 North 2nd Street Street, Suite 200
Coeur d’Alene, ID 83814

Mountain States Legal Defense Foundation
1660 Lincoln Street #2300
Denver, CO 80264

Benjamin R. Loye
Administrative Law Judge
Occupational Safety and Health
Review Commission
Room 250
1244 North Speer Boulevard
Denver, CO 80204-3582
 UNITED SATES ‘3F AMERICA

     OCCUPATIONAL SAFETY             AND HEALTH REVIEW      COMMISSION
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-- a

SECRETARY OF LABOR
Complainant,
v. OSHRC DOCKET
NO. 884962
HERN IRON WORKS
Respondent.

           --   -    NOTICE OF DOCKETING
          OF ADMINISTRATlVE              LAW JUDGE’S DECISION
 The Administrative Law Judge’s Report in the &cm referenced case was

docketed with the Commission on February 11, 1992. The decision of the Judge
will become a final order of the Commission on March 12, 1992 unless a
Commission member directs review of the decision on or before that date. ANY
PARTY DESIRING REVIEW OF THE JUDGE’S DECISION BY THE
COMMISSION MUST FILE A PETITION FOR DISCRETIONARY REVIEW.
Any such etition should be received by the Executive Secretary on or before
March 2, P992 in order to ermit sufficient time for its review. See
Commission Rule 91, 29 cp.F.R. 2200.91.
All further pleadings or communications regarding this case shall be
addressed to:
Executive Secretary
Occupational Safety and Health
Review Commission
183c K St. N.W., Room 401
Washington, DC. 20006-1246
Petitioning parties shall also mail a copy to:
Daniel J. Mick, Esq.
Counsel for Re ional Trial Liti ation
Office of the So5 ‘citor, U.S. DOgL
Room S4004
200 Constitution Avenue, N.W.
Washington, D.C. 20210
If a Direction for Review is issued by the Commission, then the Counsel for
Regional Trial Litigation will represent the Department of Labor. Any party
having questions about review rights may contact the Commission’s Executive
Secretary or call (202) 634-7950.
FOR THE COMMISSION

Date: February 11, 1992
DOCKET NO. 88-1962
NOTICE IS GIVEN TO THE FOLLOWING:

Daniel J. Mick, I%+
Counsel for Re ‘od Trial Liti ation
Office of the SoQicitor, U.S. DOI&
Room SW4
200 Constitution Ave., NM
Washington, D.C. 20210

Robert Friel, Es .
Assoc. Re ‘onal 1 elicitor
Office of ta e Solicitor, U.S. DOL
1111 Third Avenue, Suite 945
Seattle, WA 98101

Harvey Richman, Esq
111 N. 2nd Avenue
Coeur d’Alene, ID 83814

Todd S. Welch
Mountain States Legal Foundation
1660 Lincoln Street
Suite 2300
Denver, CO 80264

Benjamin R. Lo e
Administrative 63w Jud e
Occupational Safety an B Health
Review Commissron
Room 250
1244 North S eer Boulevard
Denver, CO f 0204 3582

00101894442:10
 UNITED STATES OF AMERICA
OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION
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PHONE: FAX:
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SECRETARY OF LABOR,
Complainant,

     v.                                                         OSHRC Docket No. 884962

HERN IRON WORKS, INC.,
Respondent,

APPEARANCES:
Fbrthe compIainant:
William W. Kate, Esq.,Ofke of the Solidtor,
U.S. Department of Labor,Scattl~Washington

     For the Respondent:
             Ham9 Richman,Esq.,Cam d’Alene,Idaho


                                DECISION AND ORDER

Loye, Judge:

     Thiscaseis        before the undersigned on remand f!rom the Commission. In its

remand order, the Commission directed that necessary findings be made, consistent
with the order of the United States Court of Ap@ for the Ninth Circuit. &e;
Dole v. Hm Iin Wonks, Inc., No. 90-70089 (9th Cir. July 8, 1991) [unpublished],
revs Hm Imn Works, Iizc~,1989 OSAHRC 89/62/B7 (No. 88=1%2,1989)(ALJ).
In his 1989 decision, the undersigned found that on May 24, 1988, Respondent
Hem refused to provide its injury and illness records at OSHA’s request, contrary to
the strictures of 29 CFR 91904.7, but that no violation of the cited standard resulted
because the Secretary’s attempted inspection was predicated on newly received
empkyce axqhints thaw 013a JUM 11, 1987 warrant.
rzlfher Under Co-ion
precedent glW.7 ~IMQRC&IIS
may be conducted on& with the employer’s consent or
punuant to a valid warrant or administrative subpoena. Tafi Brrxhzshg CO.,King’s
Al?ui
Divirjon, 13 BNA OSHC 1137, 198687 CCH OSHC 127,861 (No. 824016,

l=n afd, (6th Cir. 1988).
The Circuit Court overturned that holding, finding that the record contained
ample evidence demonstrating that the May 1988 inspection was sought pursuant to
the 1987 warrant and that Hem was aware of the Secretary’s reliance on that
authority.
Hem’s intentional violation of #1904.7, then, is clear, and it remains for the
undersigned to determine only whether its refusal to provide the &crew with
copies of its records constitutes a ‘%willkl”violation.
0
The Commission has held that a willfd violation is one mmmttcd with
intentional, knowing or voluntary disregard for the requirements of the Act. Because
the question of wWulness is based on the employer’s state of mind, a violation B
not be willful if the employer has an objective good faith belief that it is ccmf6rming
to the requirements of the law. Secr~ry of Labor v. calang Cop., 14 BNA OSHC
1789, 198740 CCH OSHD 129,080 (No. 85-319, 1990).
In its Post Hearing Brief Hem argued that it held a good faith belief in its
right to refuse to comply with a court order. Hem’s argument rested on its attempts
before the Ninth Circuit (in an action reviewing a contempt citation based on an
earlier attempt to execute the same warrant) to persuade that Court to adopt an
exception to the collateral bar rule, which allows a judicial order to be enforced even
though the underlying decision may be incorrect or unconstitutional. Hem’s argu-
ment was rejected by the Ninth Circuit in In Re Ehab&ment Inrpection ofHm Lhwa
wbrks, 881 F.2d 722 (9th Cir. 1989).
Hem does not address this issue in its Brief On Remand and may have aban-
doned the defense in light of the Ninth Circuit ruling. In any event, it is clear to this
judge that Hem’s argument is without merit, in that an employer may not in “good

                                         2

faith” rev OIImere speculation that a judicial exception to the accepted operation of
law mgy be -ted afker the fact.
In its Brief on Remand, Respondent maintains that while refusing to provide
the requested documents, John Hem held a ~CXXI
faith beliec based on statements
made ~JI Compliance Of&z (CO) Roger Laws, that Hem could produce the
requesteddocuments as late as the informal conference, to be scheduled later, and
that no violation would attach until that time (Respondent’s Brief On Remand, pp.

3-4)0
Hem’s argument is unpersuasive. During the attempted inspection, CO Laws
clearly indicated that although he personally did not have the authority to issue &a-
tions, Hem’s failure to turn Over the requested records constituted a violation of the
cited standard at that time, and that a citation would issue. He then informed Hem
of his rights to participate in both informal and formal hearings should he d&ape
with the allegations contained within the citation, as he routinely does in a ckring
conference (Tr. 81-82, 109-116; 11/13/91 Tr. 35).
Both prior to and at the time of the attempted inspection, Hem WIMem-
broiled in a number of other disputes with OSHA which resulted in lit@ation in the
District and Circuit Courts, e.g. see, Hem Iron Works, Inc. v. Donovan, 670 F.2d 838
(9th Cir. 1982) (Tr. 147, 172). Moreover, Hem consulted with his attorneys regard-
ing the requested inspection on the morning of May 24, 1988 (Tr. 174).
Given Hem’s lengthy and contentious association with OSH& and its oppw-
tunity to consult with counsel, it is disingenuous of Hem to claim ignorance as to the
standard procedures followed by the agency in issuing citations. The undersigned can
attribute no good faith motivation to Hem’s refusal to comply with the OSHA
request on the date of the attempted inspection, and the citation will be affirmed as
a ‘WlfUl” violation.
Penale
The Secretary has proposed a penalty of $lO,OOO.OO.
Hem maintains that the
cited violation did not constitute a direct threat of injury to any employee, and so
should be classified as de minimir, and no penalty assessed.

                                        3

The determination of what constitutes an appropriate penalty is within the
wetion of the Review Gmxmission. Long MawfacnuingCo. v. OSHRC, 554 F.2d
9()2 (8th a. 1977). In determining the penalty the commission is required to give
due consideration to the size of the empiyx, the gravity of the violation and the
employer’s good faith and history of previous violations. The ptity of the offense is
the principle factor to be considered. Nti Opemting Co., 1 BNA OSHC 1001,
1971-73 CCH OSHC W,O32 (No. 4, 1972).
As Hem has noted, the gravity of the cited violation is low. No employees
were directly exposed to a hmd as a result of Hem’s failure to turn over injury and
illness records. However, a violation is de minimis only when an empluyer’s technical
noncompliance with a standard bears a negligiile relationship to employee safety ot
health and it would be inappropriate to assess a penalty or enter an abatement
order. Cleveland Conrrolidat& Inc., 13 BNA OSHC 1114, 1987-90 CCH OSHD
127,829 (No. 84-696, 1987). It is clear that abatement, i.e. production of the
requested records is required, and has in fact been accomplished (Tr. 181). MCBC-
over, because Hem’s willful delay in doing so resulted in the needless expenditure of
the time and resources of both OSHA and the courts, assessment of some penalty is
appropriate.
The Commission has stated, however, that where necessary to best effbctuate
the purposes of the Act, consideration must also be given to modifying factors such
as the financial stability of the employer. Colonial Crnfi Remdons, 1 BNA
OSHC 1063, 1971-73 CCH OSHC 115,277 (No. 881, 1972). In Coloniizl Chji the
Commission found that the Act’s purposes were not sented by the assessment of
“destructive” penalties.
The record establishes that Hem experienced a fbe year net loss of
$17,000.00 in the years prior to 1987 (Tr. 181), although no subsequent financial data
was available. Because a small company like Hem cannot continue to sustain large
losses, including large OSHA penalties, and remain in business, the Secretary’s pro-
posed penalty of $lO,OOO.OO
is deemed excessive. A penalty of $200.00 is assessed.

                                      4

&MSIUZS
of Fact and Conclusions of Law
All findings of f&t and conclusions of law relevant and necessary to a deter-
mination of the contested issues have been found specially and appear in the de&
sion abe. See Rule 52(a) of the Federal Rules of Civil Procedure. Proposed
Findings of Fact or .Conclusions of Law that are inconsistent with this decision are
denied.
Order
10 “Willful” citation 1, item 1 alleging violation of 29 CFR 91904.7 is
AFFIRMED and a penalty of $200.00 is ASSESSED.

Dated: January 31, 1992