UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


CHAMBER CMERC US

v.

OSHA


98-1036a

D.C. Cir. 1999


*	*	*


Ginsburg, Circuit Judge: The Occupational Safety and  Health
Administration, part of the United States Department  of Labor, issued
a "Directive" pursuant to which each employ- er in selected industries
will be inspected unless it adopts a  comprehensive safety and health
program designed to meet  standards that in some respects exceed those
required by law.  The Chamber of Commerce objects to the Directive on
the  grounds that prior notice and an opportunity to comment  were
required by the Administrative Procedure Act, and that  the envisioned
inspections will violate the Fourth Amendment  to the Constitution of
the United States. Because we agree  with the Chamber that the agency
issued the Directive in  violation of the APA, we do not reach the
constitutional issue.


I. Background


According to the OSHA, the Directive, which establishes  the "OSHA High
Injury/Illness Rate Targeting and Coopera- tive Compliance Program,"
represents a new, cooperative  approach to the problem of worker
safety at some 12,500  relatively dangerous workplaces. The Directive
first provides  that each of these sites will be placed on a so-called
"primary  inspection list" and subjected to a comprehensive inspection
 before the end of 1999. (But for the Directive, the OSHA 


might have searched some of the sites, but it does not claim  that it
would have searched all of them). The Directive next  provides that
the agency will remove a workplace from the  primary inspection list,
and reduce by 70 to 90 percent the  probability that it will be
inspected, if the employer partici- pates in the agency's "Cooperative
Compliance Program."


Participation in the CCP obligates the employer to satisfy  eight
requirements. An employer must agree, for example,  to "[i]dentify and
correct hazards" and to "[w]ork toward a  significant reduction of
injuries and illnesses." Most impor- tant is the requirement that the
employer implement a "com- prehensive safety and health program"
(CSHP) that meets  the standard established in the OSHA's 1989 Safety
and  Health Program Management Guidelines.


The Directive spells out what is entailed. Most of the  requirements
are procedural. A CSHP, for example, should  include regular,
employer-conducted inspections of the work- place, investigations of
"near-miss" incidents, and a means by  which employees can complain of
unsafe practices and cir- cumstances without fear of reprisal. An
adequate CSHP  should also, however, address specific substantive
problems  associated with "ergonomics, materials handling, bloodborne 
pathogens, confined space, [and] hazard communication." Al- though
many aspects of a CSHP are, not surprisingly, direct- ed toward the
prevention or correction of violations of the  Occupational Safety and
Health Act, 29 U.S.C. ss 651-678,  the Directive makes clear that
compliance with the Act is not  in itself sufficient for participation
in the new CCP: "An  effective [CSHP] looks beyond specific
requirements of law to  address all hazards. It will seek to prevent
injuries and  illnesses, whether or not compliance is at issue."
Further to  this point, an acceptable CSHP also obligates the employer
to  be generally in compliance with applicable "voluntary stan-
dards," "industry practices," and even "suppliers' safety rec-


II. Analysis


The Chamber of Commerce petitions for review of the  Directive first on
the ground that the agency should have 


conducted a notice and comment rulemaking proceeding prior  to issuing
it. Before considering the Chamber's argument,  however, we must
consider the agency's objection that the  case is not within the
jurisdiction of this court.


A.Jurisdiction


Under the OSH Act, 29 U.S.C. s 655(f), this court has  jurisdiction to
review a "standard" issued by the OSHA. An  OSHA "regulation,"
however, is subject to review in the  district court, pursuant to the
Administrative Procedure Act,  5 U.S.C. s 703. See Workplace Health &
Safety Council v.  Reich, 56 F.3d 1465, 1467 (D.C. Cir. 1995). The OSH
Act  does not define the term "regulation," but describes a "stan-
dard" as a rule that "requires conditions, or the adoption or  use of
one or more practices, means, methods, operations, or  processes,
reasonably necessary or appropriate to provide  safe or healthful
employment." 29 U.S.C. s 652(8). The  question whether a rule is a
"standard," so defined, is to be  answered with reference to its
"basic function ... rather than  the exact nature of the 'practices,
means, methods, operations  or processes' ... it embodies." Workplace
Health, 56 F.3d at  1468 (quoting Louisiana Chemical Ass'n v. Bingham,
657  F.2d 777, 781 (5th Cir. 1981)). If the basic function of the 
rule is to "address[ ] ... a specific and already identified  hazard,
[and it is] not a purely administrative effort designed  to uncover
violations of the Act," then the rule is a standard.  Id. (quoting
Louisiana Chemical, 657 F.2d at 782). If, on the  other hand, the rule
is "merely a general enforcement or  detection procedure," then it is
a regulation. Id. In other  words, a standard, unlike a regulation, is
"aim[ed] toward  correction rather than mere inquiry into possible
hazards."  Id. (quoting Louisiana Chemical, 657 F.2d at 782).


The OSHA argues that the Directive here at issue must be  considered a
regulation for two reasons. First, it lacks some  of the formal
attributes of the typical standard. In particu- lar, according to the
agency, an employer's participation in  the CCP is strictly voluntary;
the Directive is not backed by  the threat of a legal sanction, and it
does not preempt any  regulation imposed by a state. Second, we are
told, the 


Directive cannot be a standard because it does not address a 
"specific and already identified hazard."


Although the proper characterization of the Directive is not  without
difficulty, we do not think either argument that it is a  regulation
rather than a standard withstands scrutiny. As to  the first, it is
true that the Directive does not formally  require anything: An
employer is not subject to a legal  penalty for failing to join the
CCP; it will be subject only to a  safety inspection for its
recalcitrance. Our concern, however,  is with the practical effect
(the "basic function") of the rule,  not its formal characteristics.
56 F.3d at 1468. The Cham- ber of Commerce asserts, and the agency
does not deny, that  as a practical matter being subjected to a safety
inspection  can be quite as onerous for an employer as paying a fine 
imposed by the OSHA. See Cerro Metal Prods. v. Marshall,  620 F.2d
964, 974 (3d Cir. 1980) (comprehensive OSHA "[i]n- spections ...
frequently extend over several weeks. They  necessarily create
inconvenience to the employer and a cer- tain amount of lost time for
employees who escort the inspec- tor or are otherwise disrupted in
their work").* Indeed, one  of the agency's objectives, as stated in
the Directive, is to  "leverage limited OSHA resources" by encouraging
employ- ers to adopt a "comprehensive safety and health program." 
This can only mean that the agency is intentionally using the 
leverage it has by virtue solely of its power to inspect. The 
Directive is therefore the practical equivalent of a rule that 
obliges an employer to comply or to suffer the consequences;  the
voluntary form of the rule is but a veil for the threat it  obscures.
For the same reason, it is of no great moment that  the Directive
purports not to preempt state law, although that  is undoubtedly a
point of difference between it and a formal  OSHA standard. The
distinction is not germane to our  inquiry because the failure to
preempt does not make the  Directive, as a practical matter, any more




__________

n * For this reason, we also reject the OSHA's separate argument  that
the Chamber does not have standing to sue because, absent a  legal
penalty for non-participation, employers suffer no cognizable 


"requires conditions ... necessary ... to provide safe or  healthful
employment."


The OSHA's second argument is that the Directive does  not fit squarely
within the definition of the term "standard"  that we accepted from
the Fifth Circuit in Workplace Health:  Insofar, that is, as the
Directive is intended to encourage the  spread of safety programs that
address "all hazards" in the  workplace, the OSHA argues it is not a
"remedial measure  addressed to a specific and already identified
hazard." 56  F.3d at 1468. That the Directive must therefore be deemed
a  regulation, however, does not follow. While the Directive fits  the
definition of a standard only imperfectly, it fits the  definition of
a regulation not at all. The Directive is clearly  not, for example,
"a purely administrative effort designed to  uncover violations of the
Act." By its terms, it aims to foster  safety policies more stringent
than any required by the Act or  by the regulations implementing the
Act, including, as we  have seen, "voluntary standards," "industry
practices," and  "suppliers' safety standards." Cf. id. ("[S]tandards
should  aim toward correction rather than mere inquiry into possible 
hazards"). Nor, in view of the Directive's stated goal of  correcting,
rather than merely uncovering, specific dangers in  the workplace,
including hazards not covered by any OSHA  standard, can it be
described as "merely an enforcement or  detection procedure designed
to further the goals of the Act  generally."


In any event, we doubt that the "specific and already  identified
hazard" criterion can bear the weight the OSHA  would place upon it.
The phrase was not integral to the  outcome reached in either
Workplace Health or Louisiana  Chemical. The rules held to be
regulations in those cases  were procedural; they did not directly
address any hazard,  specific or otherwise, identified or not. See
Workplace  Health, 56 F.3d at 1466 (rule requiring employers to report
 work-related deaths and hospitalizations); Louisiana Chemi- cal, 657
F.2d at 778-79 (rule requiring employers to make  available records of
employees' exposure to toxic substances).  In fact, Louisiana Chemical
suggests that the specificity of  the hazard a rule aims to correct is


whether the basic function of the rule is substantive. That a  rule is
directed toward a particular danger, rather than  danger in general,
may be relevant to whether it qualifies as a  standard; it is not,
however, dispositive. See id. at 783 n.9  ("Our problem with calling
the Records Access rule a stan- dard lies not so much in the number
[of hazards it addresses]  as with our perception of its basic
function: enforcement and  detection. Lack of particularity is merely
one aspect of this  function").


In sum, we are forced by the jurisdictional structure and  form of the
OSH Act to characterize the Directive either as a  "standard" or as a
"regulation." Although neither moniker is  entirely apt, we conclude
that the Directive is a "standard"  within the meaning of s 652(8)
because it effectively obligates  employers, under penalty of certain
inspection, to adopt a  CSHP, and thereby imposes upon employers new
safety  standards more demanding than those required by the Act or  by
any pre-existing regulation implementing the Act. And  because the
Directive is a standard, we have jurisdiction  under s 655(f) to
consider the Chamber's petition to review it. 


B.Notice and Comment


Under the APA, 5 U.S.C. s 553, an agency seeking to  promulgate a rule
must first provide the public with notice of,  and an opportunity to
comment upon, a proposed version of  it. The OSHA concedes that the
Directive is, in APA par- lance, a "rule," and therefore that s 553
applies. See United  States Dep't of Labor v. Kast Metals Corp., 744
F.2d 1145,  1149-51 (5th Cir. 1984) (agency inspection plan is a rule
for  purposes of s 553). The agency takes the position, however,  that
notice and comment rulemaking was not required be- cause the Directive
falls into the exceptions provided in  s 553(b)(3)(A) for "rules of
agency ... procedure" and "gen- eral statements of policy."


1.Procedural rule


A procedural rule is one that does not itself "alter the  rights or
interests of parties, although it may alter the  manner in which the
parties present themselves or their  viewpoints to the agency."
Batterton v. Marshall, 648 F.2d 


694, 707 (D.C. Cir. 1980). A substantive rule, in contrast, has  a
"substantial impact" upon private parties and "puts a stamp  of
[agency] approval or disapproval on a given type of behav- ior."
American Hosp. Ass'n v. Bowen, 834 F.2d 1037, 1047  (D.C. Cir. 1987).
This distinction is often difficult to apply, as  even a purely
procedural rule can affect the substantive  outcome of an agency
proceeding. See JEM Broad. Co. v.  FCC, 22 F.3d 320, 326 (D.C. Cir.
1994). Because of this  difficulty, we apply s 553(b)(3)(A) with an
eye toward balanc- ing the need for public participation in agency
decisionmaking  with the agency's competing interest in "retain[ing]
latitude  in organizing [its] internal operations." Batterton, 648


In defense of its position that the Directive is a procedural  rule,
the OSHA advances two arguments. First, minimizing  the significance
of the CCP, it asserts that the Directive is  merely an inspection
plan that does not put its "stamp of  approval or disapproval" on any
particular behavior. Then,  ignoring the inspection plan, it maintains
that the Directive  has no "substantial impact" upon covered employers
because  of the voluntary nature of the CCP. But the inspection plan 
and the CCP are two elements of the same rule; in determin- ing
whether notice and comment were required before it  could be
promulgated, we must view the rule as a whole.


So viewed, it is apparent that the Directive cannot be  considered
procedural. If the function of the CCP were  simply to provide each
employer with the option of substitut- ing self-inspection for an
equivalent inspection conducted by  the OSHA, then the agency could
make a creditable argu- ment that the Directive does not represent the
kind of  normative judgment characteristic of a substantive rule. See 
Guardian Fed. Savings & Loan Ass'n v. FSLIC, 589 F.2d  658, 665 (D.C.
Cir. 1978) (rule requiring regulated institutions  to hire private
accountants to perform audits is procedural).  The OSHA may not,
however, tell employers in one breath  that participation in the CCP
requires more than mere com- pliance with the OSH Act--which clearly
ups the substantive  ante--and tell us in the next that the sole
purpose of the CCP  is to make unnecessary the inspections it performs


uncover violations of the Act. At least to the extent that 
participation in the CCP requires more than adherence to  existing
law, the Directive imposes upon employers more than  "the incidental
inconveniences of complying with an enforce- ment scheme," Bowen, 834
F.2d at 1051; it has a substantive  component.


This conclusion is supported also by the underlying reasons  for
distinguishing between substantive and procedural rules  in
prescribing procedures for rulemaking. The Directive is  intended to,
and no doubt will, affect the safety practices of  thousands of
employers. The value of ensuring that the  OSHA is well-informed and
responsive to public comments  before it adopts a policy is therefore
considerable. The other  side of the balance, moreover, is empty: The
agency does not  contend that its need for "latitude in organizing
[its] internal  operations" is implicated at all in the present case.
Batter- ton, 648 F.2d at 707.


Nor can the OSHA prevail by renewed resort to its obser- vation that
the Directive is not backed by the threat of a legal  sanction. Like
the jurisdictional issue discussed above, the  question whether a rule
is substantive or procedural for the  purposes of s 553(b) is
functional, not formal. That is why  we examine how the rule affects
not only the "rights" of  aggrieved parties, but their "interests" as
well. Batterton,  648 F.2d at 707; see also Bowen, 834 F.2d at 1045
("Substan- tive rules are ones which grant rights, impose obligations,
or  produce other significant effects on private interests"). Of 
course, whether a rule has the force of law often will bear  upon its
proper classification as substantive or procedural.  See, e.g.,
Chrysler Corp. v. Brown, 441 U.S. 281, 301-02 (1979)  (that agency
rule is backed by the force of law suggests it is  substantive).* It
will not necessarily be controlling, however.  Here, for example, the
Directive will affect employers' inter-




__________

n * Citing Chrysler Corp., the agency argues that because a rule 
backed by the force of law is substantive, a rule that has no binding 
legal authority must therefore be procedural. By the same reason- ing,
one would conclude that because all men are mortal, women  must be
immortal.


ests in the same way that a plainly substantive rule mandat- ing a
comprehensive safety program would affect their rights;  that it so
operates without having the force of law is therefore  of little, if
any, significance. In practical terms, the Directive  places the
burden of inspection upon those employers that fail  to adopt a CSHP,
and will have a substantial impact upon all  employers within its
purview--including those that acquiesce  in the agency's use of
"leverage" against them. Consequent- ly, we conclude that the
Directive is a substantive rather than  a procedural rule.


2.General statement of policy


A general statement of policy "does not establish a binding  norm. It
is not finally determinative of the issues or rights to  which it is
addressed. The agency cannot apply or rely upon  [such a] policy as
law because a general statement of policy  only announces what the
agency seeks to establish as policy."  Pacific Gas & Elec. Co. v. FPC,
506 F.2d 33, 38 (D.C. Cir.  1974). The OSHA argues that the Directive
meets this  definition, raising once more the point that the rule
imposes  no formal legal obligation upon an employer that chooses not 
to participate in the CCP.


In this context, the agency's contention has some intuitive  appeal: At
first glance, one might think that a rule could not  be considered a
"binding norm" unless it is backed by a  threat of legal sanction.
Beyond that first glance, however,  its appeal is fleeting.


In American Bus Association v. United States, 627 F.2d  525 (1980), we
held that the question whether a rule is a  policy statement is to be
determined by whether it (1) has  only a prospective effect, and (2)
leaves agency decisionmak- ers free to exercise their informed
discretion in individual  cases. See id. at 529-30. Both criteria lead
us here to the  conclusion that the Directive is a substantive rule
rather than  a policy statement. First, the Directive provides that
every  employer that does not participate in the CCP will be 
searched. The effect of the rule is therefore not to "an- nounce[ ]
the agency's tentative intentions for the future,"  Pacific Gas, 506
F.2d at 38, but to inform employers of a 


decision already made. See American Bus Ass'n, 627 F.2d at  531 (order
indicating that applicants providing certain docu- ments would receive
"immediate issuance" of certificate per- mitting transport of goods to
Canada had current, not pro- spective, effect and therefore was not
statement of policy); cf.  Pacific Gas, 506 F.2d at 40-41 (order
intended to inform  public of types of plans that will receive
"initial and tentative"  agency approval is policy statement). Indeed,
the OSHA  admits in its brief that the inspection plan "leave[s] no
room  for discretionary choices by inspectors in the field." And the 
Directive itself suggests that the agency will not remove an  employer
from the CCP unless the employer fails to abide by  the terms of the
program. Therefore, although the Directive  does not impose a binding
norm in the sense that it gives rise  to a legally enforceable duty,
neither can it be shoehorned  into the exception for policy


III. Conclusion


For the foregoing reasons, we hold first that the Directive  is a
standard within the meaning of 29 U.S.C. s 655(f) and  therefore that
we have jurisdiction over the Chamber's peti- tion for review. Because
the Directive is neither a procedural  rule nor a policy statement, we
hold that the OSHA was  required by the APA to conduct a notice and
comment  rulemaking proceeding before issuing it. The Directive is 
therefore vacated without prejudice to the ability of the  agency to
repromulgate it after observing the required proce- dures.


So Ordered.


Silberman, Circuit Judge, dissenting: I would agree with  the majority
on the merits if I thought we had jurisdiction to  review OSHA's
Directive. But as I read Workplace Health  and Safety Council v.
Reich, 56 F.3d 1465 (D.C. Cir. 1995),  the Directive is not a
"standard" reviewable directly in the  court of appeals. That is so
because, although I believe the  Directive is an APA regulation--I
simply do not understand  the majority's explanation why it is not,
see Maj. Op. at 6--it  is not directed at a "particular hazard."
Therefore, under our  governing precedent, petitioners should be
obliged to seek  review first in the district court.