Jaxon Industrial Services, Inc. (ALJ decision, February 13, 1995)

Plain-English summary

Jaxon Industrial Services was cleaning a nonhazardous black-liquor spill at a Jacksonville paper mill when OSHA cited it for lacking an emergency response plan. The original hazardous-waste emergency-response allegation was dismissed, and the alternative emergency-action-plan citation was later vacated because Jaxon had only five employees at the site and had orally instructed them about escape routes. Jaxon then sought $6,325.14 in attorney fees and expenses under the Equal Access to Justice Act. The judge denied the application because the Secretary's contrary interpretation of the small-employer exception was substantially justified. The exception did not say whether it counted employees companywide or at a particular workplace, and a related standard used explicit workplace language, giving the Secretary a reasonable legal and factual basis for litigating the issue.

Decision snapshot

• Cited standard(s): 29 C.F.R. §§ 1910.38(a), 1910.38(a)(5)(iii), 1910.120(q)(1), and 1910.165(b)(5).
• Outcome: Procedural. Jaxon's application for $6,325.14 in attorney fees and expenses was denied.
• Key point: A prevailing employer does not receive EAJA fees when the Secretary's losing interpretation still had a reasonable basis in the standard's text, the facts, and a related regulation.

Full text (OSHRC public release)

UNITED STATES Of AMERICA
OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION One Lafayette Centre
1120 20th Street, N.W. - 9th Floor
Washington, DC 200364419

SECRETARY
OF LABOR
Complainant,
v. OSHRC DOCKET
NO. 92-0884
JAXON INDUSTRIAL
SERVICES, INC.
Respondent.

NOTICE OF DOCKETING
OF ADMINISTR4TIV-E LAW JUDGE’S DECISION
The Administrative Law Judge’s Report in the above referenced case was docketed with the Commission on January 12, 1995. The decision of the Judge will become a final order of the Commission on February 13, 1995 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. An such etition should be received b the Executive Secretary on or before I)
Fe g ruarv . 1995 in order to Dennit s Ilk cient time for its review. See Commiskion Rule 91, 29 C.F.k. 2200.91. All further pleadings or communications regarding this case shall be addressed to:
Executive Secretary
Occupational Safety and Health
Review Commission
1120 20th St. N.W., Suite 980
Washington, D.C. 20036-3419
Petitioning parties shall also mail a copy to:
Daniel J. Mick, Esq.
Counsel for Regional Trial IX ation
Office of the Solicitor, U.S. DO‘t
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 bbor. bY Party having questions about review nghts may contact the Commission’s Executive Secretary or call (202) 6063400.
FOR THE CO-ION

Date: January 12, 1995
& DOCKET NO. 92-0884
NOTICE IS GIVEN TO THE FOLLOWING:

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

Jaylynn Fortney
Retional Solicitor
Office of the Solicitor, U.S. DOL
Suite 339
1371 Peachtree Street, N.E.
Atlanta, GA 30309

Robert E. Rader, Jr., Es tie
Rader, Smith, Campbell lk Fisher
Stemmons Place, Suite 1233
2777 Stemmons Freeway
Dallas, TX 75207

James D. Burroughs
Administrative Law Jud e
Occupational Safety an cf Health
Review Coma&on
Room 240
1365 Peachtree Street, N.E.
Atlanta, GA 30309 3119

00018352807:04
 UNITED STAES OF AMERICA
OCCUPATIONAL
SAFETY AND HEALTH REVIEW COMMISSION
1365 PEACHTREE STREET, NE., SUITE 240
ATLANTA, GEORGIA 30309-3119

FAX.
PHONE
COM (404) 347-0113
COM (404) 347-4197
Frs (404) 347-0113 ns (404) 347-4197

SECRETARY OF LABOR,
Complainant,
*
v. OSHRC Docket No. 92-884

                          JAXON                             INDUSTRL4L                 SERVICES,               INC.,                           0

-Respondent.

APPEARANCES:

John A Black, Esquire
Robert E Rader, Jr., Esquire
Office of the Solicitor
Rader, Smith, Campbell & Fisher
U. S. Department of L&or
DaUas,Texas
Atlanta, Georgia
For Respondent
For Complainant

DECISION AND ORDER

Jaxon Industrial Services, Inc. (Jaxon), seeks attorney’s fees and other expenses, in accordance with the Equal Access to Justice Act (EAJA), 5 U.S.C. 0 504, 29 C.F.R.
8 2204.101, et seq., for the costs incurred in its defense against a citation issued by the Secretary on February 11, 1992.

Backmound -

Jason is an industrial cleaning company that performs high-pressure water blasting and industrial vacuuming at papermiiis, coal-fired, and chemical plants. In November 1991, Jaxon was engaged in cleaning up a spill at the Jefferson-Smurfit Jacksonville papermiI1 in Jacksonville, Florida. Its five-man crew was cleaning up a “black liquor,” a non-hazardous substance used in the papermaking process.

• w--e .--. P--w-- - - -- -- -... -.. A- _ _ .. I- .
   The two-million gallon spill of black liquor prompted an inspection by OSHA Compliance Officer Anthony Wilk. The spill was caused by a rupture in a storage tank. Wilk believed that the black liquor was a hazardous substance and that Saxon was engaged in an “emergency response action.”
  The original citation alleged a violation of 5 1910.12O(q)(1), for failure to implement
  and maintain an emergency response plan. The Secretary amended the citation to allege, in the alternative, a violation of 5 1910.38(a). During the hearing, the allegation that respondent violated 0 1910.120(q)(l) was dismissed because the Secretary indicated that no evidence would be presented on that allegation.
  The matter was heard before Judge James D. Burroughs in Jacksonville, Florida, on
  November 6,1992. In his decision, Judge Burroughs vacated the citation.

                        The Eaual Access to Justice Act
  

  Under the EMA, a private party that prevails against the Federal
  Government in an administrative adjudication (including a contest of an
  OSHA citation) and that meets certain limits on net worth and number of
  employees, is entitled to an award of attorneys’ fees and other expenses,
  unless the position of the government as a party to the proceeding was
  “substantially justied” or special circumstances make an award unjust.

AsbestosAbatement Condtatihn & Engiiaee~g, 15 BNA OSHC 1252,199l CCH OSHD ll 28,628 (No. 8791522,1991).
The Secretary has the burden of demonstrating that his position was substantially justified. “The test of whether the Secretary’s action is substantially justified is essentially one of reasonableness in law and fact.” MautM Oren, Inc., 16 BNA OSHC 1006,1991-1993 .
CCH OSHD ll29,986, p. 41,066 (No. 89.1366,1993). The Tenth Circuit has addressed the standard of reasonableness by which the Secretary is to be judged:
[Tlhe reasonableness test breaks down into three parts: the government must show “that there is a reasonable basis l for the facts alleged . . . that there l l

exists a reasonable basis in law for the theory it propounds and that the facts alleged will reasonably support the legal theory advanced.”

2
Id., 1991-1993CCH at p. 41,066, quoting Ga&on v. Bowen, 854 F.2d 379, 380 (10th Cir. 1988) (citation omitted).

Relief Sought

Jaxon seeks attorney’s fees and expenses in the amount of $6,325.14. Jaxon attached to its application documentation and an itemized statement showing number of hours spent in connection with the proceeding, a description of the specific setices performed, the hourly rate, and expenses.

Criteria for EB

The prevailing party in an EAJA case must meet the established eligiiility requirements before it can be awarded attorney’s fees and expenses. Commission Rule 2204.105(b)(4) requires that an eligible employer be “a . . . corporation . . . that has a net worth of not more than seven million dollars and employs not more than five hundred employees 0 0 00m According to Jaxon’s application for award of fees and expenses, at the time it filed its notice of contest, Jaxon employed a total of thirteen employees and had a net worth of less than 7 million dollars. The Secretary does not dispute this. Jason has satisfied the eQiiiility requirements.

Prevailing Partv

Section 504(a)(2) of 5 U.S.C. provides, in pertinent part:

A party seeking an award of fees and other expenses shall within thirty days . of the f!inaldisposition in the adversary adjudication submit to the agency an application which shows that the party is the prevailing party . . l l

Judge Burroughs vacated the single item set forth in the citation. Jaxon was the prevailing party.

The Alleged Violation

The Secretary charged Jaxon with a serious violation of 0 1910.38(a), which provides, in pertinent park

3
 (a) Emergency action plan. (I) Stop and application. This paragraph (a) applies to all emergency action plans required by a particular standard. The emergency action plan shall be in writing (except as provided in the last sentence of paragraph (a)(s)(iii) of this section) and shall cover those designated actions employers and employees must take to ensure employee safety from fire and other emergencies.
(2) Elimen~. The following elements, at a minimum, shall be included in the plan:
(i) Emergency escape procedures and emergency escape route assignments.

Section 1910.38(a)(S)(iii) provides:
The employer shall review with each employee upon initial assignment those parts of the plan which the employee must know to protect the employee in the event of an emergency. The written plan shall be kept at the workplace and made available for employee review. For those employers with 10 or fewer employees the plan may be communicated orally to employees and the employer need not maintain a written plan.

The Secretary argues that Jaxon’s written plan was inadequate to meet the requirements of the standard because it failed to specify “emergency escape route assignments.” Judge Burroughs found that Jaxon came under the exemption in 0 1910.38(a)(S)@) because it had only five employees at the Jefferson-Smurfit papermill. With fewer than ten employees, Jaxon was permitted to communicate its emergency action plan orally to the employees. Judge Burroughs found that “Jaxon had escape routes established and provided oral instruction to its employees concerning potential escape routes” (Judge Burroughs’ decision, p. 9). Judge Burroughs did not address the adequacy of Jaxon’s written emergency action plan.

The Secretary% Position Was
“Substantiallv Justified”

The Secretary argues that its position at the hearing was substantially justified because he reasonably interpreted the exception in 5 1910.38(a)(5)@) to exclude employers who

4 employed a total workforce of ten or fewer employees. The exception provides: “For those employers with 10 or fewer employees the plan may be communicated orally to employees and the employer need not maintain a written plan.” Jaxon employed twenty employees at the time of Wilk’sinspection (“I’r.41).
Jaxon argued, and Judge Burroughs agreed, that the exception refers to the number of employees at a specific workplace, not the aggregate number of employees.
It is undisputed that Jaxon had fewer than ten employees at the Jefferson-Smutit papermill.
Under the reasonableness test for substantial justification formulated by the Tenth Circuit, the Secretary must show that (1) there was a reasonable basis for the facts alleged, (2) there exists a reasonable basis in law for the theory he propounds, and (3) the facts alleged will reasonably support the legal theory advanced The Secrew has established that there was a reasonable basis for the facts alleged.
Jaxon had a total of twenty employees. To the Secretary, its written emergency action plan appeared to lack a crucial element, ia, the emergency escape route assignments.
The second element the Secretary must establish is that there is a reasonable basis in law for the theory he propounds. The Secretary argues that Jaxon’s written plan failed to meet the requirements of the standard. The Secretary also argues that his interpretation of the exception in 3 1910.38(a)(5)@) (that it refers to an employer’s total workforce) is - reasonable. As support, the Secretary cites a related standard, 5 1910.165(b)(5), which excepts “employers with 10 or fewer employees at a particular workplace.” The Secretary contends that when a standard specifies “at a particular workplace,” then only employees at that particular workplace are counted. Otherwise, when a standard provides, as does 0 1910.38(a)(5)@), that “employers with 10 or fewer employees” are excepted, the total number of the employer’s employees must be counted. l

The Secretary’s position is based on a reasonable interpretation of the standard. As worded, the exception provided in 5 1910.38(a)(5)@@is ambiguous. A reasonable person reading the standard could interpret it either way. The fact that a similar exception in a related standard specifies that it applies to a discrete workplace lends support to the Secretary’s case. Jaxon relies on two sources to counter the Secretary’s claim that its interpretation of the standard is reasonable.. First, Jaxon quotes from OSHA Immction CPL 2-1.4B, promulgated August 29, 1988, in which the Secretary instructs his complitice officers to include “truck drivers, sales and office personnel, seasonal employees, and part-time employees,” in determining the total number of employees “at a given workplace” for the purposes of 0 1910.38(a). As the Review Commission has noted on numerous occasions, the
Field Opetationr Manual and OSHA I~w&s
are internal documents that provide
guidance to OSHA prof~ionals but do not have the force and effect of law. These documents do not confer procedural or substantive rights or duties on individuals. See Catepilla~ Iii., 15 BNA OSHC 2153,1993 CCH OSHD ll29,%2 (No. 87.922,1993). The OSHA Iiitn~ti& bears no relevance in this case.
Second, Jaxon cites Peavey G~ih Co., 15 BNA OSHC 1354, 1991 CCH OSHD II 29,533 (No. 89-3046, MU), in support of its claim that the Secretary’s position was not substantially justified. Jaxon states that in Pmvey, “the Secretary j&i&@ admitted that the 10 employee exemption does not refer to total employment. In Peavey, the Secretary even acknowledged that the IO-employee exemption can refer to the number of employees in a specific work area within an overall facility. 15 BNA OSHC at 13581359” (Jaxon’s Reply to Complainant’s Opposition to Application for Fees and Expenses, p. 7). Judge Burroughs also cited Peavey in finding that Jaxon was exempt from having a written plan under 9 1910.38(a)(5)(iii).
A closer look at Peavey, however, reveals a significant difference between it and the present case. The standard at issue in Pewey is 6 1910.165@)(S),which the Secretary has cited in this case as ‘support for its position. As previously noted, 0 1910.16;@)(S) creates an exception for “employers with 10 or fewer emplbyees in a particular workplace.” In Peavey,the Secretary agreed that “ ‘a particular workplace’ can refer to something less than a whole facility? Peavey, 15 BNA at 1359. The standard at issue here, 0 1910.38(a)(5)(iii), lacks the crucial phrase “in a particular workplace.” Therefore, Pavq, is inapposite to the ’ ‘--T-.
-.

6 issue in the instant case. The Secretary ‘has established that his theory has a reasonable basis in law. His position that the 8 1910.38(a)(S)(“‘) 111exemption refers to an employer’s total workforce is reasonable.
The Secretary must also show that the facts alleged will reasonably support the legal theory advanced. The Secretary relies on the fact that Jaxon had more than ten employees, which supports his theory Jaxon cannot avail itself of the ten-or-fewer employees exemption.
The Secretary has established that his position at the hearing was substantially justified. Jaxon’s application for fees and expenses under the EAJA is denied.

FINDINGS OF FACT AND
CONCLUSIONS OF LAW

The foregoing decision constitutes the findings of fact and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure.

ORDER

Based upon the foregoing decision, it is ORDERED: That the application for attorney’s fees and expenses is denied.

Is/ Paul L. Bradv
PAUL L. BRADY
Judge

Date: January 3, 1995