Docket No. 86-0388_86-0535
SECRETARY OF LABOR, Complainant, v. INTERCONTINENTAL CHEMICAL CORPORATION, Respondent.
OSHRC Docket Nos. 86-0388 & 86-0535
The Secretary's notice of withdrawal is construed as a motion to withdraw the citation in docket number 86-0535 and is granted. The parties have settled all issues in docket number 86-0388. Accordingly, these cases are final.
This Order is issued pursuant to a delegation of authority to the Executive Secretary. 41 Fed. Reg. 37173 (1976), amended at 44 Fed. Reg. 7255 (1979).
FOR THE COMMISSION
Dated: July 17, 1987
SECRETARY OF LABOR, Complainant, v. INTERCONTINENTAL CHEMICAL CORPORATION, Respondent.
OSHRC Docket Nos. 86-0388 and 86-0535 (Consolidated)
Victoria L. Belfiglio, Esquire, Office of the Solicitor, U. S. Department of Labor, Cleveland, Ohio, on behalf of complainant
Robert A. Dimling, Esquire, Cincinnati, Ohio, on behalf of respondent
DECISION AND ORDER
SALYERS, Judge: The respondent, Intercontinental Chemical Corporation, is engaged in manufacturing a variety of chemical products at its plant. located in Cincinnati, Ohio. Following an inspection of its operations by the Occupational Safety and Health Administration, U. S. Department of Labor, respondent was charged with certain infractions of the Occupational Safety and Health Act (29 U.S.C. § 651, et seq.) and the regulations issued thereunder. The parties have settled all issues raised in OSHRC Docket No. 86-0388 by a settlement agreement (Ex. J-14) filed with the court at the commencement of the hearing in these consolidated cases (Tr. 5). The issue remaining for decision in OSHRC Docket No. 86-0535 is whether respondent willfully violated the Hazard Communication Standard ("HCS"), 29 C.F.R. § 1910.1200, through its failure to provide the Secretary of Labor the chemical or common names of all ingredients in certain products as alleged by the Secretary in his citation issued on April 2, 1986.
The HCS was published on November 25, 1983, 48 Fed. Reg. 53,280, and took effect with respect to chemical manufacturers, importers and distributors on November 25, 1985.[] It was designed to alert employees of safety and health hazards associated with chemicals through a comprehensive communication and training program involving the identification of hazardous substances (29 C.F.R. § 1910.1200(b)(1) and 1910.1200(d)) through the use of material safety data sheets ("MSDS") and labeling (29 C.F.R. § 1910.1200(g)).
Shortly after the effective date of this new standard, Compliance Officer James Washam was dispatched by his Area Director to "spot check" respondent's compliance with the HCS. Washam met with Cameron Cord, respondent's vice-president in charge of operations, and Gary Valasek, director of technology, on December 2, 1985, and requested a random sampling of respondent's MSD's and corresponding product labels. Valasek complied with this request and presented five samples for Washam's examination (Exs. C-1, C-2). Washam noted that respondent had not identified the chemical ingredients in Section I of these data sheets but had declared this information to be "proprietary" and, therefore, nondisclosable under the "trade secrets" provisions of standard. 29 C.F.R. § 1910.1200(i)(12). While acknowledging possible application of the trade secrets exception to these circumstances, Washam insisted that respondent must furnish the chemical identify of these products to the Secretary "notwithstanding" its trade secret claim (Tr. 43-44). Valasek, being uncertain with respect to what position respondent should take at time, took exception to Washam's demand but agreed to give the situation more thought and to discuss the matter further with James Sweeney, hazard communication coordinator for the Cincinnati area OSHA office (Tr. 63, 239). On December 6, 1985, Valasek contacted Sweeney as agreed, reasserted respondent's claim with respect to trade secrets, but furnished Sweeney with the names of all hazardous ingredients in the five products that were the subject of the December 2 inspection (Tr. 337-339). At the time Sweeney concluded respondent had furnished the information originally requested and had, therefore, complied with the standard (Tr. 183-184). Shortly after the call on December 6, Sweeney met with Washam to discuss what violations would be charged in preparation for conducting a closing conference in the case. A decision was reached to omit the charge relating to failure to furnish the above discussed information (Tr. 69-71), leaving only the five "other" violations which have now been settled by agreement of the parties. A closing conference was conducted by Mr. Washam with company officials on March 4, 1986, ostensibly for the purpose of disposing of the "other" citation.
During the course of these discussions on March 4, the subject of disclosure of ingredients was again raised by the parties and an impasse was reached on whether the standard required the disclosure to the Secretary of all ingredients, hazardous as well as nonhazardous, contained in each of the products encompassed in the initial inspection (Tr. 108-109). Valasek reported to Washam that he did not supply Sweeney with all ingredients contained in the products at the time of his telephone call on December 6 and that respondent did not intend to make any further disclosures (Tr. 74, 78-79). Valasek confirmed in his testimony that respondent has never supplied OSHA with all ingredients in its products (Tr. 354).
The Secretary now takes the position that respondent's failure to make a complete disclosure of all ingredients constitutes a violation of the cited standard while respondent contends it is required only to disclose the identity of hazardous substances and that it complied with this requirement when it orally advised the Secretary's agent of the hazardous ingredients during the telephone conversation between Valasek and Sweeney on December 6, 1985.[[2/]]
The term "trade secret" is defined at 29 C.F.R. § 1910.1200(c) to mean:
* * * [A]ny confidential formula, pattern, process, device, information or compilation of information (including chemical name or other unique chemical identifier) that is used in an employer's business, and that gives the employer an opportunity to obtain an advantage over competitors who do not know or use it.
The standard provides at § 1910.1200(i):
(i) Trade secrets. (1) The chemical manufacturer, importer or employer may withhold the specific chemical identity, including the chemical name and other specific identification of a hazardous chemical, from the material safety data sheet, provided that:
(i) The claim that the information withheld is a trade secret can be supported;
(ii) Information contained in the material safety data sheet concerning the properties and effects of the hazardous chemical is disclosed;
(iii) The material safety data sheet indicates that the specific chemical identity is being withheld as a trade secret; and,
(iv) The specific chemical identity is made available to health professionals, in accordance with the applicable provisions of this paragraph.
Finally, at § 1910.1200(i)(12) the standard provides:
(12) Notwithstanding the existence of a trade secret claim, a chemical manufacturer, importer, or employer shall, upon request, disclose to the Assistant Secretary any information which this section requires the chemical manufacturer, importer, or employer to make available. Where there is trade secret claim, such claim shall be made no later than at the time the information is provided to the Assistant Secretary so that suitable determinations of trade secret status can be made and the necessary protections can be implemented.
How the Secretary should handle trade secret claims under the Hazard Communication Standard was a matter of considerable discussion and debate in the proceedings leading to the adoption of the Final Rule. See Fed. Reg. Vol. 48, No. 228, 53, 312-53, 320 (Jt. Ex. 1). On the one hand, chemical manufacturers argued the importance of maintaining trade secrets and the necessity to prevent compromise of these valuable assets through the indiscriminate disclosure of the chemical ingredients of product formulation. By contrast, unions and other employee advocates took the position that the objectives of the standard could only be achieved through the complete disclosure of all chemical identities in a product subject only to the confidentiality restrictions imposed where a bona fide trade secret is involved.
In an effort to balance these opposing interests, the Secretary has promulgated rules which minimize potential conflicts by narrowly defining the circumstances under which specific chemical identity must be disclosed and authorizing the use of confidentiality restrictions to protect the disclosure of trade secrets.
It is important to note that 29 C.F.R. § 1910.1200(i) of the Hazard Communication Standard permits the withholding of "specific chemical identity" [[3/]] from the MSDS if a trade secret claim is supported but does not permit the withholding of such information from a treating physician in a medical emergency (29 C.F.R. § 1910.1200(i)(2)) or from "health professionals" (i.e., physician, industrial hygienist, etc.) in non-emergency situations (29 C.F.R. § 1910.1200(i)(3)) under terms specified therein.
In contrast to the restrictions imposed in 29 C.F.R. § 1910.1200(i)(3) through (i)(11)[[4/]] of the Hazard Communication Standard, as they relate to "health professionals," § 1910.1200(i)(12) imposes no such restrictions upon the Secretary except to require that he makes "suitable determinations of trade secret status" and implement "necessary protections" to safeguard the trade secret claim.
The Secretary's role in dealing with trade secret claims is discussed in United Steelworkers of America v. Auchter, 763 F.2d 728 (3d. Cir. 1985):
Trade secret protection may arise from two sources: state law or a federal statute. Ruckelshaus v. Monsanto Co.,U.S. ________, _______, 104 S. Ct. 2862, 2872, 81 L. Ed. 2d 815 (1984); Chevron Chemical Co. v. Costle, 641 F.2d 104, 115 (3d Cir.), cert. denied, 452 U.S. 961 101 S. Ct. 3110, 69 L. Ed. 2d 972 (1981). The OSH Act does not create substantive trade secret protection. It deals with that subject in section 15, which provides:
All information reported to or otherwise obtained by the Secretary or his representative in connection with any inspection or proceeding under this chapter which contains or which might reveal, a trace secret referred to in section 1905 of Title 18 shall be considered confidential for the purpose of that section, except that such information may be disclosed to other officers. or employees concerned with carrying out this chapter or when relevant in any proceeding under this chapter. In any such proceeding the Secretary, the Commission, or the court shall issue such orders as may be appropriate to protect the confidentiality of trade secrets.
29 U.S.C. § 664 (1982). The cross-reference to the Trade Secrets Act, 18 U.S.C. § 1905 (1982) confirms that Congress intended section 15 to protect against agency disclosure or misuse of data submitted to it under an expectation that the agency would treat that data as a trade secret to the extent that applicable state law did so. See Ruckelshaus v. Monsanto, supra, _______ U.S. at _________, 104 S. Ct. at 2876. Section 15 cannot be read as authorizing the creation of trade secret protection going beyond that afforded under state law. Moreover that section deals only with what the agency and its employees may disclose, not with what disclosures the agency may compel in the interest of safety in the workplace. (Emphasis added) At 739-740.
Respondent does not dispute the Secretary's right to obtain the identity of all hazardous chemicals in a given product but staunchly maintains that the Secretary has no entitlement under the standard to require the disclosure of nonhazardous ingredients. Respondent's reluctance to disclose these nonhazardous substances is based upon its assumption that the information addressed in § 1910.1200(i)(12) of the Hazard Communication Standard does not include nonhazardous substances (See Respondent's Brief, pp. 11-16). While there is some plausibility to respondent's argument, interpreting the standard to allow a manufacturer to selectively choose what will or will not be disclosed does not comport with the overall objectives of the standard to provide the Secretary with full and complete information. Furthermore, it is difficult to conclude that a disclosure of nonhazardous substances would somehow have a greater impact on trade secret protection than the disclosure of hazardous substances provided, of course, respondent is not required to disclose process or percentage of mixture information.[[5/]]
The Secretary argues with persuasion that all ingredients must be disclosed to afford him an opportunity to insure that chemical manufacturers have properly evaluated the chemical mixtures and that ail hazardous substances are properly identified. He further urges that his responsibilities require more than a passive, unquestioning acceptance of a manufacturer's evaluation to insure that the mandates of the standard are effectuated. This approach seems reasonable and is in accord with a sensible interpretation of the standard and its overall objectives.
It is concluded that the Secretary in this case, upon request, was entitled to obtain a full disclosure of the chemical contents of each product involved in his inspection conducted on December 5, 1985. Respondent's failure to make full disclosure constituted a violation of 29 C.F.R. § 1910.1200(i)(12).
The Secretary's characterization of this violation as willful has been fully considered but is rejected. While it might be concluded on this record, as the Secretary suggests, that respondent took unreasonable position on a clear obligation to make a full disclosure to the Secretary, it seems more likely that both parties were involved in an unfamiliar and unsettled area of law resulting from a newly adopted regulation, the force and effect of which were uncertain to both. Under these circumstances, a finding of a "serious" violation with a penalty of $500 will suffice to make the Secretary's point.
FINDINGS OF FACT
1. The respondent, Intercontinental Chemical Corporation, is a chemical manufacturer having its main plant in Cincinnati, Ohio. At all relevant times respondent had employees who handled or otherwise worked on goods that have been moved in or produced for commerce.
2. The Hazard Communication Standard (29 C.F.R. § 1910.1200) promulgated under the Occupational Safety and Health Act (29 U.S.C. § 651, et seq.) became effective with respect to chemical manufacturers on November 25, 1985.
3. On December 2, 1985, a compliance officer of the Occupational Safety and Health Administration conducted an inspection of respondent to determine its compliance with the Hazard Communication Standard. Respondent furnished the compliance officer with a sampling of material safety data sheets and labeling with respect to five of its products. The data sheets did not identify specific chemical identities for these products but reflected that this information was "proprietary" and, therefore, nondisclosable under the trade secret provisions of the standard.
4. The compliance officer insisted that respondent furnish the chemical identity of these products to the Secretary despite its trade secret claim, but this request was refused by respondent's agent.
5. On December 6, 1985, respondent's agent contacted the Secretary's hazard communication coordinator and furnished an incomplete list of the chemical substances contained in the products under examination by the Secretary.
6. On March 4, 1986, an agent of the Secretary again requested a complete list of all chemical substances in the products under investigation. This request was also denied by respondent who continued to refuse to provide the chemical identity of all ingredients in its products on the basis of the trade secret provision.
CONCLUSIONS OF LAW
1. The respondent is an employer affecting commerce within the meaning of the Act and is subject to the jurisdiction of the Occupational Safety and Health Review Commission.
2. The Hazard Communication Standard (29 C.F.R. § 1910.1200) provides protection for a bona fide trade secret under the terms and conditions set forth therein.
3. Section 1910.1200(i)(12) of the Hazard Communication Standard requires a chemical manufacturer to disclose upon request by the Secretary any information encompassed by the standard. Notwithstanding the existence of a trade secret, a manufacturer must make a complete disclosure of all ingredients contained in a product, hazardous as well as nonhazardous, upon request by the Secretary. Under such circumstances a manufacturer may request, and the Secretary must supply, appropriate confidentiality protection to prevent the compromise of trade secrets as contemplated by section 15 of the Occupational Safety and Health Act.
4. By its refusal to supply the chemical identities of all substances contained in its products pursuant to the Secretary's request, respondent seriously violated the provisions of 29 C.F.R. § 1910.1200(i)(12).
It is hereby ORDERED:
1. (a) The parties have resolved all issues raised in Docket No. 86-0388 by a settlement agreement (Ex. J-14) duly executed and filed. The terms of this settlement agreement are incorporated herein.
(b) Respondent's request to withdraw its notice of contest is granted, and "other" than serious Citation No. 1 is affirmed with no penalties assessed.
2. In OSHRC Docket No. 86-0535, Citation No. 1 is affirmed as a serious citation with a penalty of $500 assessed.
EDWIN G. SALYERS Judge
Date: April 6, 1987
SECRETARY OF LABOR, Complainant, v. INTERCONTINENTAL CHEMICAL CORPORATION, Respondent.
OSHRC Docket Nos. 86-0388 and 86-0535
ORDER APPROVING SETTLEMENT OF RESPONDENT'S EAJA CLAIM
This matter is before the undersigned upon the stipulation of the parties in connection with respondent's Equal Access to Justice claim. In accordance with the agreement reached, the settlement is approved and it is hereby ORDERED:
Complainant will pay to respondent the sum of $12,500 representing attorney's fees and expenses incurred in the above-captioned case.
EDWIN G. SALYERS
Date: November 6, 1987
[[1/]] Respondent raises a defense that since respondent is both an "employer" and a "manufacturer," the standard did not become effective with respect to respondent until May 25, 1986 (effective date for "employers"). This defense is without merit and is rejected.
[[2/]] It does not appear in the record that respondent sought, or the Secretary furnished a "confidentiality agreement" as contemplated by the standard or Section 15 of the Act. Accordingly, this aspect of the case was not raised as an issue by the parties nor is it considered in this opinion.
[[3/]] The term "specific chemical identity" is broadly defined in Section C of the standard to mean "the precise chemical designation of the substance."
[[4/]] These provisions require a written request which describes the need for the requested information and the justification therefor and provides a procedure whereby a manufacturer may deny the request in writing and submit the matter to the Occupational Safety and Health Administration for determination.
[[5/]] The disclosure of "process or percentage of mixture information" is specifically excluded from the Secretary's domain by 29 C.F.R. § 1910.1200(i)(13). During the investigation no request was made for this type of information (Tr. 61), and none was obtained.