AMERICAN BARREL COMPANY, INC.

OSHRC Docket No. 8679

Occupational Safety and Health Review Commission

May 27, 1977

[*1]

Before BARNAKO, Chairman and CLEARY, Commissioner.

COUNSEL:

Baruch A. Fellner, Office of the Solicitor, USDOL

Albert H. Ross, Regional Solicitor, U.S. Department of Labor

Harry H. Toltz, for the employer

OPINIONBY: CLEARY

OPINION:

DECISION

CLEARY, Commissioner:

This matter is before the Commission by my order granting complainant's petition for discretionary review pursuant to section 12(j) of the Occupational Safety and Health Act of 1970, 29 U.S.C. 651 et. seq. [hereinafter the "Act"]. n1 The sole issue for review is whether Judge Robert P. Weil erred in holding that the Commission lacked jurisdiction over the subject matter of this proceeding because respondent was not engaged in a business affecting commerce.

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n1 Commissioner Moran has also issued a general direction for review, pursuant to section 12(j) of the Act.

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Respondent had been engaged in the business of reconditioning steel barrels and drums for customers since 1933. On March 19, 1974, it voted to dissolve its corporate existence. The Kingston Steel Drum Company [*2] was to take over the workplace and operations after dissolution. During the period from 1933 until its operation ended in early April 1974, it is undisputed that respondent was engaged in a business affecting commerce. Subsequent to this time its activity consisted of concluding its business affairs, a process which continued beyond the date of the hearing, December 23, 1974. The winding-up period included the dismantling of machinery by two employees in preparation for sale to second-hand machinery and scrap metal dealers. Respondent's bookkeeper was at this time engaged in making entries on the books, maintaining records, collecting outstanding bills and liquidating respondent's accounts payable and receivable.

On May 22, 1974, a fire broke out in respondent's workplace, destroying the building and all of respondent's records. The bookkeeper was unable to work on that date or thereafter because of the fire. During the morning of the fire, the maintenance men were engaged in the dismantling of fixtures on a water tank. The equipment that was to be sold as scrap metal had not yet been removed. On May 23, 1974, an OSHA compliance officer inspected respondent's workplace. [*3] Later, two citations were issued for one serious and two non-serious violations of standards adopted under the Act. n2

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n2 Respondent was cited for non-serious violations of 29 CFR 1910.252(a)(2)(v)(b)(7) and 1910.159(d), and a serious violation of 1910.252(d)(2)(ii). These citations are not before us on review.

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Judge Weil concluded that respondent had been engaged in a business affecting commerce before dissolution of its corporate affairs, but concluded that at the time of the fire and subsequent inspection there was no such activity by respondent. He reasoned that there was no proof that as part of its dissolution activities respondent affected commerce by selling scrap metal interstate, purchasing materials originating outside of Massachusetts, or using any facilities of commerce through interstate travel or communication. Accordingly, the Commission was found to lack jurisdiction over the subject matter of the proceeding.

In its brief, respondent contends that the Secretary failed to establish that the [*4] activities in which respondent was engaged at the time of inspection affected commerce. Respondent asserts that the Commission decisions in Anchorage Plastering Company, 3 BNA OSHC 1284, 1974-75 CCH OSHD para. 19,720 (No. 3322, 1975), petition for review docketed, No. 75-2747, 9th Cir., Aug. 8, 1975; Les Mares Enterprises, 3 BNA OSHC 1015, 1974-75 CCH OSHD para. 19,538 (No. 2455, 1975), rev'd sub nom. Godwin v. OSHRC, 540 F.2d 1013 (9th Cir. 1976); and Franklin R. Lacy, 4 BNA OSHC 1115, 1976-77 CCH OSHD para. 20,617 (No. 3701, 1976), petition for review docketed, No. 76-2201, 9th Cir., June 1, 1976, support this view and it urges affirmance of the Judge's decision.

Complainant argues that the Act evinces a Congressional intent to use the Commerce Clause to its fullest extent, so that every employer is covered, no matter how slight the impact on interstate commerce. Complainant maintains that intrastate and individually de minimis activity, when combined with like conduct by others, affects commerce. It is further asserted that the Judge's inquiry regarding activity affecting commerce should have gone beyond the specific activities involved [*5] at the time of inspection to an examination of the broad range of respondent's contacts which affected commerce. Also, complainant maintains that, inasmuch as respondent was an on-going entity until the time of the hearing, with the intention of turning over the business to another employer upon dissolution, the activities incidental to the transfer of a business engaged in commerce themselves affect commerce.

We disagree with Judge Weil's holding that respondent was not engaged in a business affecting commerce at the time of the alleged violations. The Act was intended by Congress to reach employers, no matter how slight the impact on interstate commerce, in order to ensure the protection of employees. n3 The U.S. Courts of Appeals that have considered the issue have concluded that it was the intent of Congress in passing the Act to exercise fully its constitutional authority under the Commerce Clause. Godwin v. OSHRC, 540 F.2d 1013, 1015 (9th Cir. 1976), reversing Les Mares Enterprises, Inc., 3 BNA OSHC 1015, CCH OSHD para. 19,538 (1975); U.S. v. Dye Construction Co., 510 F.2d 78, 83 (10th Cir. 1975); Brennan v. OSAHRC & John J. Gordon Company, Inc., 492 F.2d [*6] 1027, 1030 (2d Cir. 1974). In Gordon Judge Friendly stated:

Throughout the legislative history of the Act, the objective was repeatedly stated to be to make maximum use of the commerce power so that, as was almost as often said, states and employers insisting on a high degree of safety should not be disadvantaged by the failure of others to do so. Id.

We agree with complainant's position that the "affecting commerce" language contemplates more than the specific activity on the day of the alleged violation. Respondent continued as an on-going entity and had employees at least until the time of the hearing. To set a jurisdictional cutoff at the time regular manufacturing activities were terminated would deprive these employees of the protection of the Act in a manner inconsistent with a full exercise of the Commerce Clause. Respondent was preparing for its takeover by another company and acts incidental to the transfer of the business from one owner to another resulted in continued activity affecting commerce, although in a different form than previously.

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n3 116 Cong. Rec. 36509, 36537, 38369, 38704, 42206 (1970); Brennan v. OSAHRC & John J. Gordon Company, Inc., 492 F.2d 1027, 1030 (1974).

[*7]

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In concluding its business affairs respondent was collecting unpaid bills by mail and was in the process of liquidating its accounts payable and receivable. In addition, employees were dismantling machinery which was to be sold as scrap metal. Even if the effect on interstate commerce is slight, the reach of Congressional power extends to intrastate activities which substantially interfere with the exercise of that power. See Wickard v. Filburn, 317 U.S. 111, 124 (1942).

In the case of Godwin v. O.S.H.R.C., supra, respondent Les Mares Enterprises was involved in clearing land and selling timber prior to planting a vineyard. The corporation had obtained a registration for limited partnership whereby the property would be leased to the partnership in return for the development of the vineyard and the planting of grapes. While in the process of clearing the land, one of Les Mares' employees was injured by a wood-chopping machine, resulting in the citation of the employer for a violation of an OSHA safety standard. Grapes had not been planted at the time of the alleged violation. [*8] The majority of the Commission found the intent to grow grapes insufficient to establish interstate commerce activity. In reversing the Commission decision, the court found that grape production was an activity affecting commerce and that the clearing of land, as an essential prerequisite to grape production, also affected commerce. The court stated that Congress had intended the coverage of the Act to be as broad as the scope of the Commerce Clause and, relying upon Fry v. U.S., 421 U.S. 542, 547 (1975), ruled that even intrastate activity was covered where the activity, combined with like conduct by others, affected commerce among the states.

Applying the rationale of Godwin to this case, it is clear that the Commission has jurisdiction. Respondent's employees were dismantling machinery to be sold as scrap metal. Since the selling of scrap metal clearly affects interstate commerce, respondent belonged to a class whose activity affects commerce. As a part of this class, it is immaterial that respondent's intended future sales may have been wholly intrastate in nature. Fry v. U.S., supra. Although no actual sales of scrap metal had been made, the dismantling [*9] of machinery was a prerequisite to selling it as scrap just as clearing land was a prerequisite to grape production in Godwin.

The other decisions relied on by respondent to establish that it was not a business affecting commerce are inapposite. Anchorage Plastering Company, supra, was a one-to-one decision which the participating Commissioners specifically indicated was to have no precedential value. In Franklin R. Lacy, supra, the only evidence submitted by the Secretary to show that respondent affected commerce was that the tools used by respondent were manufactured by businesses affecting commerce. No evidence as to the movement of these tools in commerce was adduced. In this case, as discussed, the Secretary has established that respondent was engaged in a business affecting commerce at the time of the alleged violation.

We reverse the Judge's finding that the Commission lacks jurisdiction and remand the case for rehearing.

So ORDERED.

CONCURBY: BARNAKO

CONCUR:

BARNAKO, Chairman, Concurring:

I agree that Congress intended to use its authority under the Commerce Clause to the fullest extent. I do not agree, however, that this means every employer in the Nation is subject [*10] to the Act. If that were the case, there would be no need for courts to inquire whether the evidence in individual cases is sufficient to find that the employers are engaged in a business affecting interstate commerce. Godwin v. OSHRC, 540 F.2d 1013 (9th Cir. 1976), reversing Les Mares Enterprises, Inc., 75 OSAHRC 47/G2, BNA 3 OSHC 1015, CCH OSHD para. 19,538 (1975); U.S. v. Dye Construction Co., 510 F.2d 78 (10th Cir. 1975); Brennan v. OSHRC (John J. Gordon Co.), 492 F.2d 1027 (2d Cir. 1974). Indeed, the courts have not decided the constitutional question which my colleague would decide and which the Secretary assumes. The question is whether under its commerce power Congress may reach all employers in the Nation or whether some employers are not within the commerce power by virtue of the nature of their employment activities. For example, can Congress under its commerce power regulate religious organizations insofar as such organizations employ individuals to perform religious services? I would think that a regulation which would interfer with the performance of a religious service must be unconstitutional under the First Admendment. But if that is so then [*11] it follows that the commerce power is not so broad as to reach all employer activities. Accordingly, where an employer denies an allegation that he is an employer within the meaning of the Act I would require proof by the Secretary on the coverage issue. See Franklin R. Lacy, 76 OSAHRC 44/E10, 4 OSHC 1115, OSHD para. 20,617 (1976), pet. for review filed, No. 76-2201, 9th Cir., June 1, 1976.

I agree in this case that the Secretary has established coverage for the reasons assigned by my colleague.