Attorneys for Amicus Curiae Indiana Legal Foundation
Lewis D. Beckwith
Danelle Miller Marks
Baker & Daniels
Attorneys for Appellee
Jeffery A. Modisett
Attorney General of Indiana
Deputy Attorney General
JOHN P. GRIFFIN (formally Kenneth Zeller), In His Capacity As The
COMMISSIONER OF THE INDIANA DEPARTMENT OF LABOR,
Appellee (Defendant below).
) Supreme Court No.
) Court of Appeals No.
June 30, 2000
The Commissioner of the Indiana Department of Labor and the Commissioner's de
are charged with administering and enforcing IOSHA and the safety standards adopted by
the Standards Commission.
Id. § 22-8-1.1-22.1. The Commissioner and designated representatives
are authorized by IOSHA to enter without delay and inspect at all reasonable
times places of employment in order to enforce any provisions of [IOSHA], including
occupational safety and health standards. Id. § 22-8-1.1-23.1.
This case arises out of such an inspection. Between April 11 and August 15, 1991, an IOSHA compliance safety and health officer conducted an inspection of LTV Steel Co mpanys Harbor Works Facility (LTV Steel) in East Chicago, Indiana. The investigation identified a series of alleged violations. Pursuant to the Commissioners authority under section 25.1 of IOSHA, the Commissioner issued two notices of alleged violations, referred to in IOSHA as safety orders, to LTV Steel.
The first safety order listed fourteen alleged serious
violations of IOSHA safety standards
1. Storage of steel coils between five and six feet in height in a way that obscured the vision of employees operating a remote control crane in a high volume traffic area.
2. Transporting scrap hoppers down aisleways overloaded and with sharp pieces of
steel hanging over the sides causing a hazard to persons wal
king or moving
into the aisles.
3. Potholes and a large oil spill in the floor area around
a tin mill coil storage stand conveyor.
4. Huge potholes and uneven floor area where the slab carriers tran
slabs of steel.
5. Failure to instruct employees working in and around the chromic acid
tanks as to the hazards of their job.
6. Failure to instruct supervisors and workers in slab carrier operations in
the proper selection, use and maintenance of respirators.
7. Water supply turned off and eye wash and drenching station not
readily available where industrial batteries were being replaced and recharged.
8. A tin mill crane malfunctioned and the crane went out of
The Commissioner assessed penalties totaling $12,200 for these violations. See footnote
The second safety order alleged knowing violations
of IOSHA safety standards arising from
a June 17, 1991, incident in which an unsecured grate on a chromic
acid tank slid out of place, causing an employee to fall into the
tank. The order further alleged that during a recent maintenance, the bolts
that secured the grate had been removed and were not replaced, and that
there had been no immediate supply of clean cold water for washing off
chemicals or other liquids. The Commissioner assessed penalties totaling $20,000 for these
The IOSHA compliance safety and health officer who conducted the inspection was Harvey French. French had been a union employee of A.M. General Corporation in Mishawaka prior to being laid off in December 1989. Upon taking the position as compliance safety and health officer with the Labor Department in May 1990, French notified A.M. General of his new position. While employed with the Labor Department, French remained on layoff status with A.M. General and enjoyed recall rights of re-employment. French also had a vested pension with A.M. General.
Unbeknownst to French at the time he began a previous inspection of the LTV Steel facility in late 1990, LTV Steel and A.M. General were sister subsidiaries of the same parent corporation, LTV Corporation. At some point during the prior inspection, French became aware of the connection between the two corporations and advised LTV Steel officials of his layoff status with A.M. General. French was told by LTV Steel officials See footnote that LTV Steel had no objection to his conducting the inspection and encouraged him to proceed. See footnote Likewise, during the 1991 inspection at issue, no LTV Steel official or employee objected to Frenchs participation in the inspection at the LTV Steel facility.
As noted above, Frenchs inspection resulted in two safety orders dated September 23,
1991, being issued to LTV Steel. As authorized by section 28.1 of
IOSHA, LTV Steel filed a petition for review dated October 10, 1991, denying
each of the allegations in the safety o
At this point, the
matter became subject to the procedural requirements of both IOSHA and the Indiana
Administrative Orders and Procedures Act, Ind. Code § 4-21.5-1-1 et seq. (AOPA).
Under IOSHA, the Commissioner certified the dispute to the Indiana Board of Safety
Review (Safety Board). The Safety Board is given the power under IOSHA
to affirm, modify, or dismiss any action of the Commissioner concerning an alleged
violation (including any penalty and abatement period).
See Ind. Code § 22-8-1.1-30.1.
By operation of AOPA, the Safety Board assigned the matter to an
administrative law judge for a hearing.
On March 24, 1993, LTV Steel filed a motion for summary judgment contending
that the entire inspection conducted by French and the resulting safety orders were
ecause French had a statutorily prohibited conflict of financial interest when he
conducted the inspection. The specifics of LTV Steels summary judgment argument were
(1) that section 9(a) of the statute governing Indiana state employee ethics (Ethics
provides, A state officer or employee may not participate in any decision
. . . in which the state officer or the employee . .
. has a financial interest, Ind. Code § 4-2-6-9(a); (2) that French participated
in the decision to issue the safety orders to LTV Steel; (3) that
French had a financial interest within the meaning of section 1 of the
Ethics Code, in LTV Steel arising out of his employment relationship with A.M.
General/LTV, id. § 4-2-6-1(9); and (4) as a result, Frenchs inspection had been
conducted in violation of Indiana law and the safety orders should be vacated.
LTV Steel also provided an additional argument in support of partial summary
For purposes of our decision today, it is sufficient to say that on
May 13, 1993, the administrative law judge denied the motion for summary judgment
On February 24, 1995, the Safety Board reversed the
administrative law judges decision and granted summary judgment to LTV Steel. The
Safety Board held that the inspection conducted by French was invalid because French
had a conflict of financial interest that violated section 9 of the Ethics
Code. Having rendered the inspection invalid, the Safety Board dismissed all IOHSA
violations that were subject to the ALJs recommendation.
Exercising the right of judicial review of agency action under chapter 5 of
AOPA, the Commissioner appealed the decision of the Safety Board. In this
petition for review, the Commissioner argued that LTV Steel failed to demonstrate that
French was biased by [the] alleged financial interest, (R. at 1830), or that
he was influenced in any manner by the tenuous relationship between [LTV Steel]
and A.M. General when he conducted the inspe
ctions. (R. at 1831.)
Therefore, the Commissioner contended that the Boards decision [was] arbitrary and capricious,
. . . in excess of statutory jurisdiction, . . . and
otherwise not in accordance with the law, . . . because there
is no factual or legal basis upon which the Board could properly conclude
that Harvey Frenchs inspection of LTV was clouded by any conflict of interest
. (R. at 1768-69.)
On September 16, 1996, the Marion Superior Court vacated the Safety Boards dec
reversing the ALJs denial of LTV Steels motion for summary judgment and remanded
the matter to the Safety Board for further review. In reaching its
conclusion, the trial court agreed with the Commissioners contention that there was no
evidence that French was influenced by his attenuated relationship with A.M. General when
he conducted the inspections at the LTV Steel plant. The trial court
further determined that dismissing the IOSHA violations based on a purported conflict of
a regulatory inspector would contravene public policy because such action would unjustifiably reward
LTV [Steel] for ignoring health and safety regulations. (R. at 1894.)
But on January 12, 1998, the Court of Appeals reversed the trial court
and reinstated the determination of the Safety Board. LTV Steel Co. v.
Zeller, 686 N.E.2d 904 (Ind. Ct. App. 1997).
(2) contrary to constitutional right, power, privilege, or immunity;
(3) in excess of statutory jurisdiction, authority, or limitations, or short of statutory
(4) without observance of procedure required by law; or
(5) unsupported by substantial evidence.
See Ind. Code § 4-21.5-5-14(d).
While an appellate court grants deference to the administrative agencys findings of fact,
no such deference is accorded to the agencys conclusions of law.
Indiana Dept of Pub. Welfare v. Payne, 622 N.E.2d 461, 465 (Ind. 1993),
rehg denied; Board of Trustees of the Pub. Employees Retirement Fund of Ind.
v. Miller, 519 N.E.2d 732, 733 (Ind. 1988). An interpretation of a
statute by an administrative agency charged with the duty of enforcing the statute
is entitled to great weight, unless this interpretation would be inconsistent with the
statute itself. See Indiana Dept of State Revenue v. Bulkmatic Transport, Co.,
648 N.E.2d 1156, 1158 (Ind. 1995); cf. Lyng v. Payne, 476 U.S. 926,
939 (1986). But an administrative agency does not have the power to
make decisions properly committed to another agency. See Spoon v. Town
of Pittsboro, 706 N.E.2d 254, 257 (Ind. Ct. App. 1999); Bell v. State
Bd. of Tax Commrs, 651 N.E.2d 816, 819 (Ind. Tax 1995); see also
Charles H. Koch, Jr., Administrative Law and Practice § 11.26, at 140 (2d
ed. 1997) (Courts will give no special deference to interpretation by one agency
of another agencys rules.). An administrative agency has only those powers
conferred on it by the legislature, and unless we find the grant of
powers and authority in the statute, we conclude that no power exists.
See Citizens Action Coalition of Ind., Inc. v. NIPSCO Northern Ind. Pub. Serv.
Co., 485 N.E.2d 610, 612 (Ind. 1985), cert. denied, 476 U.S. 1137 (1988).
For the reasons discussed below, we find the action of the Safety Board
in dismissing the safety orders was not in accordance with law, Ind. Code
§ 4-21.5-5-14(d)(1), and was in excess of the Safety Boards statutory jurisdiction,
It is clear from this regulatory scheme that the legislature intended the Ethics
mmission to have exclusive jurisdiction to establish a code of ethics for the
conduct of state business, id. § 4-2-6-3, and to adjudicate alleged violations thereof,
id. § 4-2-6-4. The Ethics Commission shares with the appointing authority or
state elected official for which or whom a violator is employed the authority
to impose sanctions. Id. §§ 4-2-6-4(b)(2)(E)-(F) and 4-2-6-12. That is, when
a state employee is alleged to have violated an ethics requirement, the allegation
is not adjudicated by the appointing authority or state elected official for which
or whom the alleged violator is employed but by the Ethics Commission.
See, e.g., Indiana State Ethics Commn v. Nelson, 656 N.E.2d 1172 (Ind. Ct.
App. 1995) (state ethics requirement violations by State Department of Natural Resources employees
adjudicated by Ethics Commission), transfer denied.
The Safety Board resolved this case by adjudicating French to have had a
financial interest as defined by the Ethics Code
and thereby violated Ind. Code
which prohibits a state employee from participat[ing] in any decision or
vote of any kind in which the state . . . employee .
. . has a financial interest.
Id. § 4-2-6-9(a) (1990); see also
Ind. Admin. Code tit. 40, r. 2-1-9(f) (Supp. 1991). In making these
determinations, the Safety Board exceeded its jurisdiction. We shall examine IOSHA, the
statute under which the Safety Board operates in some detail infra, but point
out here that there is nothing in it that authorizes the Safety Board
to adjudicate violations of the Ethics Code. And, as we just explained,
we find such to be within the exclusive jurisdiction of the Ethics Commission.
At least two policy reasons for entrusting such determinations exclusively to the Et
Commission seem clear to us. If each state agency were to issue
its own interpretations of what, say, constituted an impermissible financial interest, the standards
would inevitably vary from agency to agency. This would make compliance unnecessarily
difficult, especially for employees who are reassigned among agencies or who may perform
responsibilities for more than one. We get a sense of such inconsistency
in this case where the Safety Board, the trial court, and the Court
of Appeals each tried their respective hands at interpreting the meaning of financial
interest in the Ethics Code with varying results. Second, though not directly
implicated here, entrusting such determinations to a single agency assures consistency in the
application of due process rights of alleged violators.
(2) Cancel a contract.
(3) Bar a person from entering into a contract with any agency for
eriod specified by the commission. The period specified by the commission
may not exceed two (2) years from the date the action of the
commission is effective.
Id. § 4-2-6-12. It is clear that the express language of the Ethics Code does not authorize the dismissal of an IOSHA safety order as a sanction for a violation of the Ethics Code.
Nor do we find such authority implied by the statute. First, the structure of the Ethics Code is clearly pointed at sanctioning state employees who violate the Ethics Code and not conferring benefits on third parties arguably injured by a state employees violation. All of the sanctions impinge upon the individual state employee personally. It is true that the Ethics Code remedy providing for the cancellation of a contract entered into in violation of the Et hics Code could confer a benefit on a party which had unsuccessfully sought the contract in the sense that that party might again be able to seek the contract. But where the legislature specifically provided the remedy of contract cancellation without providing a counterpart remedy of regulatory action dismissal, we are unable to infer any legislative intent that the Ethics Code be available as a defense against an IOSHA safety order.
This conclusion comports with the law generally applicable to the ability of private parties to enforce rights under particular statutes. As a general rule, a private party may not enforce rights under a statute designed to protect the public in general and containing a co mprehensive enforcement mechanism. See, e.g., Ritz v. Indiana & Ohio R.R., 632 N.E.2d 769, 775 (Ind. Ct. App. 1994), transfer denied; Coons by Coons v. Kaiser, 567 N.E.2d 851, 855 (Ind. Ct. App. 1991), rehg denied; Borne by Borne v. Northwest Allen County Sch. Corp., 532 N.E.2d 1196, 1203 (Ind. Ct. App. 1989); Hirschauer v. C & E Shoe Jobbers, Inc., 436 N.E.2d 107, 111 n.4 (Ind. Ct. App. 1982). We hold that because the Ethics Code is designed to protect the public in general and contains a comprehensive enforcement mechanism, it implies no entitlement for use as a defense against an IOSHA safety order.
At the time the safety orders were issued to LTV Steel, the text
of IOSHA contained no express affirmative defenses to alleged workplace safety violations.
In 1995, the legisl
ature added a new section to IOSHA recognizing an affirmative
defense for a violation of any standard, rule, or order that is the
result of employee misconduct. Ind. Code § 22-8-1.1-27.2 (as added by P.L.
224-1995 § 1). The fact that the legislature has provided an affirmative
defense only for employee misconduct leads us to conclude that the legislature did
not intend that IOSHA itself provide any other affirmative defenses to alleged IOSHA
We believe this conclusion is harmonious with the central purpose and basic policy
As set forth supra, IOSHA requires that every Hoosier employer
must establish and maintain conditions of work which are reasonably safe and healthful
for employees, and free from recognized hazards that are causing or are likely
to cause death or serious physical harm to employees. Ind. Code §
22-8-1.1-2. Further, every Indiana employer must comply with the occupational health and
safety standards established under IOSHA. Id. § 22-8-1.1-3.1. To permit an
employer to have allegations of IOSHA violations against it dismissed on the basis
that the IOSHA inspector had a conflict of financial interest not permitted by
the Ethics Code would frustrate the Commissioners obligation under IOSHA to enforce safety
orders to establish and maintain conditions of work which are reasonably safe and
healthful for employees. Id. § 22-8-1.1-2; see also id. § 22-8-1.1-22.1 (setting
forth the Commissioners enforcement power under IOSHA). An inspectors Ethics Code impermissible
financial interest in no way excuses or mitigates workplace safety violations.
the pervasive emphasis in IOSHA on an employers duty to maintain a safe
workplace, we are unable to find an implied affirmative defense for violations of
the Ethics Code.
In reaching this conclusion, we note three parts of chapter 3 of AOPA:
(1) Section 14, which discusses certain requirements for proceedings before an administrative law
judge, recognizes that a party may assert an affirmative defense specified by law,
Ind. Code § 4-21.5-3-14(a)(c); AOPA itself does not provide or otherwise enumerate any
affirmative defenses, (2) Section 13 contains a specific provision prohibiting an investigator in
a regulatory proceeding from serving as an administrative law judge or assisting or
advising the administrative law judge in any way, id. § 4-21-5-3-13; and (3)
sections 9, 10, and 12 collectively contain an extensive set of provisions governing
the disqualification of administrative law judges on grounds of bias. Our examination
of these three parts of AOPA lead us to conclude that, while the
legislature specifically considered the role of affirmative defenses, regulatory investigators, and bias in
writing the AOPA, it did not provide or suggest that an investigators impermissible
financial interest under the Ethics Code could serve as any type of defense
in AOPA proceeding.
Employers protection against wrongful allegations of safety violations is the elab
orate administrative and
judicial review provisions of the AOPA. This protection, constitutional in dimension,
an employer a broad opportunity to exonerate itself from allegations of workplace safety
violations. But this protection, at least under current law, does not extend
to an automatic dismissal of charges on grounds that the safety inspector violated
the Ethics Code.
Ind. Admin. Code tit. 40, r. 2-1-4 (Supp. 1991) characterizes financial interest
as economic interest, meaning a substantial financial interest in investments, employment,
awarding of contracts, grants, loans, purchases, leases, sales or similar matters under consideration
or consummated between a state agency over which the person has jurisdiction or
in which the person is employed.
Increasingly of late, local and national newspapers and media interests have carried substantial
news stories regarding claims of corruption by government officials. Whether those stories
concern Arkansas, Washington, D.C., or Indianapolis, Indiana, one abiding element e
xists in each:
the citizenry opposes actions by government officials which aggrandize the power, position, or
fortune of the government official because he or she has the authority to
make a decision affecting others. That is the central core of the
definition of conflict of interest.
Appellants Br. at 1. While we appreciate the point LTV Steel makes,
we question its relevance to this case which we do not perceive
to involve any question of government corruption. At no point does LTV
Steel accuse French of corruption.