January 6, 2016

Is OSHA unconstitutional?

By Damien M. Schiff Senior Attorney

I think so.* In 1970, Congress enacted the Occupational Safety and Health Act, the main purpose of which is to assure workers safe and healthful working conditions. To that end, the Act authorizes the Secretary of Labor to issue health and safety standards. The Act defines these, at first blush reasonably enough, as standards that are “reasonably necessary or appropriate to provide safe or healthful employment and places of employment.”** What could be the constitutional problem with such straightforward worker protection?

The Constitution enacts a separation of the legislative, executive, and judicial powers. It vests in Congress all “legislative Powers,” in the President the “executive Power,” and in the Judiciary “the judicial Power.” The United States Supreme Court has interpreted this separate vesting to prohibit one branch of government from delegating its authority to another branch of government. As applied to the legislative branch, the Court has interpreted this “non-delegation” doctrine to require Congress to include in its legislation an “intelligible principle” to guide the law’s execution. See J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409 (1928). A law that lacks such an intelligible principle is an impermissible delegation of legislative power and therefore void. See generally Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935).

The question then, as applied to OSHA, is whether its “reasonably necessary or appropriate” delegation establishes an intelligible principle. Does that delegation give the Secretary any guidance as to how stringent a safety standard should be? Whether the standard should be technologically feasible? Whether or to what extent it should be economically feasible? Whether costs in any form should be taken into account? The statute’s text does not appear to resolve any of these key questions, but rather seems to leave them to the Secretary’s discretion. The absence of statutory guidance raises a non-delegation concern.

Over twenty years ago, the D.C. Circuit acknowledged the same concern. In International Union v. OSHA, 938 F.2d 1310 (D.C. Cir. 1991), the labor and industry petitioners challenged an OSHA safety standard governing the maintenance and servicing of industrial equipment. The appellate court interpreted the Secretary’s position at that time to be that the Secretary could “require precautions that take the industry to the verge of economic ruin (so long as the increment reduces a significant risk . . . ), or to do nothing at all,” a “claimed power [that], we believe, raise[s] a serious nondelegation issue.” Id. at 1317. The court’s concern was amplified given the “immens[ity]” of the safety standard program, “encompassing all American enterprise.” Id. Such broad power produced, in the court’s view, a dangerous risk of government favoritism. “The cost of compliance with a standard will vary among firms in an industry, so the power to vary the stringency of the standard is the power to decide which firms will live and which will die.” Id. at 1318. For their part, the industry petitioners argued that the non-delegation problem could be solved by interpreting the Act to require that safety standards pass a cost-benefit analysis. The court agreed to a point. Specifically, it held that a cost-benefit analysis requirement would cure the non-delegation doctrine. But, because there might be other methods of solving that problem, the court thought that the best path was to remand to the Secretary to let him decide how to cabin his otherwise unconstitutionally overbroad delegation of power. See id. at 1321.

On remand, the Secretary promulgated a list of six factors that he believed adequately constrained his discretion. According to these factors, a safety standard: (1) must substantially reduce a significant risk of material harm; (2) must be technologically feasible; (3) must be economically feasible; (4) must be cost-effective; (5) must achieve the Act’s goals better than any standard it replaces; and (6) must satisfy basic procedural and substantive rules of administrative action. See 58 Fed. Reg. 16,612, 16,614 (Mar. 30, 1993). The Secretary, however, declined the D.C. Circuit’s invitation to adopt a cost-benefit analysis requirement. See id. at 16,616 (“The requirement that standards reduce a significant risk at a cost and in a manner that is feasible and cost-effective assures that, even without a formal cost-benefit analysis, OSHA standards ‘produce a benefit the costs of which are not unreasonable.’”) (quoting Nat’l Grain & Feed Ass’n v. OSHA, 866 F.2d 717, 733 (5th Cir. 1989)).

Industry sought review again. See Int’l Union v. OSHA, 37 F.3d 665 (D.C. Cir. 1994). This time, the court of appeals held that the Secretary’s self-limitations were sufficient to satisfy the non-delegation doctrine. But first the court observed that the Secretary’s six factors, standing alone, would not avoid the constitutional problem. The trouble with the factors, the court explained, was that they still left the Secretary with significant discretion to choose a standard anywhere between (i) just sufficient to substantially reduce the significant risk of harm, and (ii) so vigorous a reduction in risk as to approach the limits of technical and economic feasibility. See id. at 669. Nevertheless, the court ultimately found no unconstitutional delegation because, in addition to the six factors, the Secretary claimed that a standard must provide a “high degree of worker protection.” See id. (quoting 58 Fed. Reg. at 16,614). That final requirement avoided the constitutional trouble because, in the court’s view, the Secretary was “not permitted to ‘do nothing at all,’” but could “deviate only modestly from the stringency [required for certain types of OSHA] standards.” Int’l Union, 37 F.3d at 669.

Now, why doesn’t this end the story? Enter Whitman v. American Trucking Associations, 531 U.S. 457 (2001), in which the Supreme Court upheld against a non-delegation challenge the Clean Air Act’s direction to the Environmental Protection Agency to set national ambient air quality standards at levels “requisite to protect public health.” 42 U.S.C. § 7409(b)(1). Rejecting the challengers’ contention that the Act allows EPA to consider costs when issuing standards, the Court held that the “text . . . unambiguously bars consideration of costs.” Whitman, 531 U.S. at 471. Having answered that interpretive question, the Court next addressed whether, notwithstanding the Act’s ignoring of costs, EPA still retained too much discretion over standard-setting so as to violate the non-delegation doctrine. Although the Court ultimately concluded that the Act does provide the needed “intelligible principle,” the Court declined to accept the proposition that an agency can rectify an otherwise overbroad delegation:

We have never suggested that an agency can cure an unlawful delegation of legislative power by adopting in its discretion a limiting construction of the statute. . . .  Whether the statute delegates legislative power is a question for the courts, and an agency’s voluntary self-denial has no bearing upon the answer.

Id. at 472-73. The Court went on to hold that the Clean Air Act does not violate the non-delegation doctrine because the Act merely requires “EPA to set air quality standards at the level that is ‘requisite’—that is, not lower or higher than is necessary—to protect the public health with an adequate margin of safety.” Id. at 475-76.

Thus, although the Court in Whitman turned back a non-delegation challenge, it did so in a way that undercut the D.C. Circuit’s rationale for upholding OSHA against the same type of challenge. Whitman says that an agency cannot cure a non-delegation problem by declining to accept power that Congress otherwise has delegated to the agency. In contrast, it was precisely because the Secretary of Labor was purportedly successful in limiting his OSHA safety-standard-setting discretion through his various factors that the D.C. Circuit held the non-delegation problem to be resolved. Again, however, Whitman definitively rejected that rationale.

Until last year, Whitman appeared to resolve, albeit impliedly, the constitutional question against OSHA. But then the Supreme Court decided Michigan v. EPA, 135 S. Ct. 2699 (2015). That case addressed whether EPA’s decision to entirely ignore costs when determining whether it would be “appropriate and necessary” to regulate coal-fired power plants under the Clean Air Act’s hazardous air pollutant program, 42 U.S.C. § 7412(n)(1)(A), was permissible. The Court answered definitively no, explaining that it would not be rational—let alone “appropriate”—for an agency to create a regulation that produced billions in dollars in costs but only a few dollars in benefits. Michigan, 135 S. Ct. at 2707. Although the Court declined to say precisely how EPA should consider costs, the Court was firm in its conclusion that costs must be considered somehow. Id. at 2711.

Now, what does Michigan do for a non-delegation challenge to OSHA? One might argue that OSHA’s language is similar enough to the Clean Air Act’s that Michigan’s conclusion about the latter should apply to the former. In other words, per Michigan, “reasonably necessary or appropriate” means that the Secretary must take costs into account when adopting a safety standard. And perhaps that cost-consideration mandate would provide the needed “intelligible principle.”

But can a non-delegation problem be solved by providing an agency with more than one intelligible principle and giving the agency the freedom to choose among them? Put another way, assuming that Michigan-style cost consideration provides the intelligible principle, does OSHA require such consideration? Prior to Michigan, at least, the D.C. Circuit didn’t think so. After all, it held that, although “reasonably necessary or appropriate” could be interpreted to require a consideration of costs, the language didn’t demand it. And of course the Secretary has declined to impose such a cost-benefit analysis requirement on himself. See 58 Fed. Reg. at 16,616 (stating that the six factors ensure only that costs of safety standards will not be “unreasonable”); id. at 16,615 (acknowledging that standards “may impose significant costs on industry” but suggesting that, in Congress’s view, such “are necessary costs of doing business”). See also Am. Textile Mfrs. Inst., Inc. v. Donovan, 452 U.S. 490, 512 (1981) (suggesting but not deciding that the phrase “reasonably necessary or appropriate” may “contemplate some balancing of the costs and benefits of a standard).

But doesn’t Michigan’s understanding of “appropriate and necessary” mean that the Secretary must take costs into account? Not quite, in my view. A close reading of Justice Scalia’s opinion for the Court reveals that the decision turns on how to interpret the “appropriate” component of the statutory phrase “necessary or appropriate”:

Congress instructed EPA to add power plants to the program if (but only if) the Agency finds regulation “appropriate and necessary.” § 7412(n)(1)(A). One does not need to open up a dictionary in order to realize the capaciousness of this phrase. In particular, “appropriate” is “the classic broad and all-encompassing term that naturally and traditionally includes consideration of all the relevant factors.” 748 F.3d, at 1266 (opinion of Kavanaugh, J.). Although this term leaves agencies with flexibility, an agency may not “entirely fai[l] to consider an important aspect of the problem” when deciding whether regulation is appropriate. State Farm, supra, at 43, 103 S.Ct. 2856. [¶] Read naturally in the present context, the phrase “appropriate and necessary” requires at least some attention to cost. One would not say that it is even rational, never mind “appropriate,” to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.

Michigan, 135 S. Ct. at 2707. Justice Scalia’s opinion goes on to distinguish Whitman on the ground that “‘[a]ppropriate and necessary’ is a far more comprehensive criterion than ‘requisite to protect the public health.’” Id. at 2709.

Why is this parsing important? Because, unlike the Clean Air Act provision in Michigan, the relevant text in OSHA is phrased in the disjunctive. Thus, the Secretary may promulgate a safety standard that is “reasonably necessary” to protect workplace safety, or that is “appropriate” to protect workplace safety. In contrast, for EPA to promulgate a national ambient air quality standard, that standard must be necessary and appropriate.

The disjunctive is especially significant in light of Whitman, which holds that “requisite to protect the public health” excludes costs, and therefore suggests that similar phrases—such as “reasonably necessary . . . to provide safe or healthful employment and places of employment”—also excludes consideration of costs. And recall that Michigan holds that “appropriate” regulation must be cost-sensitive. Thus, an “appropriate” safety standard is one that is cost-sensitive. But here we have two competing intelligible principles—(i) regulate as much as necessary to achieve the legislative goal, and (ii) regulate to achieve the same goal but only in light of costs. Both interpretations, in light of Whitman and Michigan, are reasonable understandings of the text. But they are different intelligible principles. Cf. Am. Textile Mfrs. Inst., 452 U.S. at 513 (suggesting that cost-benefit and feasibility standards are conflicting). And that seems constitutionally problematic.

One final question: what about the avoidance canon? That canon of construction counsels that a court should construe a statute, if reasonably possible, so as to avoid a constitutional question. Does this canon effectively limit Congress’s grant of authority to the Secretary to issue safety standards? I would say no. The trouble here is that one has two reasonable yet competing interpretations of the statute, made possible thanks to Congress’s use of the disjunctive. These are the only choices, and there is no other reasonable interpretation of the text (you can’t reasonably interpret “or” to mean “and”) that can avoid the non-delegation problem. Cf. Whitman, 531 U.S. at 471 (“No matter how severe the constitutional doubt, courts may choose only between reasonably available interpretations of a text.”).

*29 U.S.C. § 652(8). The basic argument for OSHA being unconstitutional is set forth in Cass R. Sunstein, Is OSHA Unconstitutional?, 94 Va. L. Rev. 1407 (2008). Professor Sunstein, writing before Michigan v. EPA, concludes that OSHA’s safety standard provision is probably constitutional if it is read to require some consideration of costs. Whether or not that view was plausible prior to Michigan, I do not believe that such an interpretation is tenable after Michigan.

**For those standards that concern toxic materials or harmful physical agents, such must also be those “which most adequately assures, to the extent feasible, on the basis of the best available evidence, that no employee will suffer material impairment of health or functional capacity even if such employee has regular exposure to the hazard dealt with by such standard for the period of his working life.” 29 U.S.C. § 655(b)(5). The Supreme Court implicitly has held that this latter standard is enough of an “intelligible principle” to satisfy the non-delegation doctrine. See Indus. Union Dep’t, AFL-CIO v. Am. Petroleum Inst., 448 U.S. 607 (1980). The Court also has held that the express requirement of feasibility supplants any cost-benefit analysis obligation. Am. Textile Mfrs. Inst., Inc. v. Donovan, 452 U.S. 490, 509 (1981). Thus, the discussion in the text is limited to those standards that do not concern toxic materials or harmful physical agents, and thus are not subject to any principle other than “reasonably necessary or appropriate.” Cf id. at 512 (“Congress could reasonably have concluded that health standards should be subject to different criteria than safety standards because of the special problems presented in regulating them.”). Also note that there is no legislative history behind “reasonably necessary or appropriate.” Indus. Union Dep’t, 448 U.S. at 710 (Marshall, J., dissenting) (“While the standard-setting provision that the plurality ignores received extensive legislative attention, the definitional clause received none at all.”).

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