On Friday, February 3, a federal judge in Texas denied (in part) a motion to dismiss a lawsuit challenging an OSHA Standard Interpretation Letter (known as the “Fairfax Memo”) that contains policies for safety walk-arounds. The Fairfax Memo permits employees to designate third parties as their representatives in OSHA worksite inspections. NFIB argued that the memo authorizes union recruiters to enter workplaces against employer’s wishes, and is illegal because it violates the Administrative Procedures Act (“APA”) and exceeds OSHA’s statutory authority.

The OSH Act gives OSHA the right to inspect workplaces, and also gives an employee the right to have a representative present at a workplace inspection. 29 U.S.C. § 657(e). Shortly after passage of the Act, OSHA promulgated through notice and comment a rule interpreting the Act’s employee representative provision. 29 C.F.R. § 1903.8(c); see 36 Fed. Reg. 17,851 (Sept. 4, 1971).

While 29 C.F.R. § 1903.8(c) requires that the employee representative be an employee of the employer, it also permits a third party who is not an employee of the employer, “such as an industrial hygienist or a safety engineer,” to participate in the inspection if, in the judgment of the Compliance Safety and Health Officer, it is “reasonably necessary” to the conduct of an effective and thorough physical inspection of the workplace.

In February 2013, then-Deputy Assistant Labor Secretary Richard Fairfax issued the memo in response to an inquiry from a union official about whether a worker at a workplace without a collective bargaining agreement could authorize a person affiliated with a union or community organization to act as a representative. The memo concluded that the worker could authorize a person affiliated with a union or a community organization to act as his representative based this on an interpretation of the “reasonably necessary” standard for permitting third parties at walkarounds. According to the memo, a nonemployee representative is a reasonably necessary third party when he “will make a positive contribution” to an effective inspection.

NFIB alleged that the memo was unlawful for two reasons: first, the memo is in effect a legislative rule that was promulgated without an opportunity for notice and comment, in violation of the APA; and, second, the memo is inconsistent with the Act, and thus exceeds OSHA’s statutory authority.

OSHA moved to dismiss the claims under Rule 12(b)(1) for lack of subject matter jurisdiction, contending that: (1) NFIB does not have standing because it has not suffered an injury in fact; (2) the case is not ripe for review; (3) the memo is not final agency action; (4) the Act precludes pre-enforcement review of the memo; (5) NFIB has an adequate legal remedy besides the declaratory relief it sought. OSHA also moved to dismiss NFIB’s claims under Rule 12(b)(6) for failure to state a claim on which relief can be granted, maintaining that (1) the memo is an interpretive rule exempt from notice and comment under the APA; and (2) the memo is consistent with the Act and its implementing regulations. The court rejected each of these defenses.

The court concluded that the memo was a final agency action that affects the legal rights and obligations of NFIB and its members. This finding essentially declared the memo unlawful because it was not adopted through formal agency rulemaking, as required by the APA. According to the court, “The [Fairfax Memo] flatly contradicts a prior legislative rule as to whether the employee representative must himself be an employee.”

The court did, however, conclude that the memo was not inconsistent with the text of the OSH Act, and therefore dismissed NFIB’s claim that the memo exceeds OSHA’s statutory authority. The court wrote that “unlike 29 C.F.R. § 1903.8(c), which explicitly provides that ‘[t]he representative(s) authorized by employees shall be an employee(s) of the employer,” … and permits a non-employee third party to accompany the Compliance and Safety and Health Officer during a physical inspection of the workplace, the Act merely provides that the employee’s representative must be authorized by the employee, not that the representative must also be an employee of the employer.”

While ruling means only the lawsuit will not be dismissed, it is still an important victory for opponents of the walk-around rule. By rejecting each of OSHA’s procedural defenses, and by holding that the memo is final agency action, the court essentially declared that the memo is unlawful in its current form. We will continue to monitor this litigation, as the final outcome will affect both the Union Walk Around Rule and shape the ongoing debate over whether OSHA’s “interpretations” are subject to notice and comment rulemaking under the APA.

The case is styled National Federation of Independent Businesses v. Dougherty et al., Case No. 3:16-CV-2568-D and is pending in the U.S. District Court for the Northern District of Texas.