Supreme Court Enjoins OSHA Emergency Temporary Standard; Keeps CMS Rule Alive

Sheppard Mullin Richter & Hampton LLP

On January 13, 2022, the Supreme Court reinstated the nationwide injunction of the Occupational Safety and Health Administration’s (OSHA) COVID-19 Emergency Temporary Standard (ETS). (Technically, the Court overturned the Sixth Circuit’s decision dissolving the 5th Circuit’s injunction, discussed in the OSHA Emergency Temporary Standard Survival Guide.)  This means the OSHA ETS is no longer in force, and businesses, regardless of size, need not comply with the OSHA ETS vaccine/test mandate.

At the same time, in a companion decision, the Court stayed the preliminary injunctions issued by the Eastern District of Missouri and Western District of Louisiana, effectively reactivating the Centers for Medicare & Medicaid Services (CMS) vaccine mandate in all states except Texas. Neither Court decision impacts Executive Order 14042 — at least not officially.  But more on that below.

The OSHA ETS Injunction

The Court’s ruling, written by an unnamed majority (it’s a per curium decision), enjoins the ETS immediately and nationwide. In sum, the Court found the ETS goes beyond the authority of OSHA to ensure occupational safety. Finding that the ETS, as written, “operates as a blunt instrument,” the Court posed the following question:  Does the Act giving OSHA its power “plainly authorize” an ETS of this scope? The Court’s conclusion was to the point: “It does not.”

“The Act,” according to the Court, “empowers the Secretary [of Labor] to set workplace safety standards, not broad public health measures.” The Court’s bottom line was this: OSHA cannot mandate vaccines because COVID is not an occupational health hazard. If you’re interested, we have more detail on the Court’s reasoning, and the reasoning of the dissent, below.

Importantly, the Ruling does not prevent a company from voluntarily imposing a vaccine mandate. The Ruling only enjoins OSHA from enforcing such a mandate. But as we have noted previously, companies now must pay close attention to state vaccine laws which could prohibit a private employer from mandating employee vaccinations and/or inquiring as to employee vaccination status. Since there is no longer an OSHA/State conflict, the ETS no longer preempts state laws, which means state law controls an employer’s ability to impose vaccination, masking, and/or testing requirements on its employees. Thus, while a corporate-mandated vaccine requirement may be fine in some states, it could run afoul of the law in others.

While the Ruling reflects a significant blow to the President’s COVID response effort, it does not implicate EO 14042 — at least not officially. However, we suspect that as a practical matter the Ruling will have a significant impact.

The EO injunctions, currently still in place, are being reviewed by three different Courts of Appeals. We suspect those courts will keep those stays in place. Our thinking is this: If the Supreme Court has said (as it did) that OSHA overstepped when it used a Workplace Safety Act to require workers in workplaces to be vaccinated, we think it likely the Court will find the President’s use of the Procurement Act to impose an even broader protection also is an overstep.

There is a contrary argument. As discussed below, the Court upheld the CMS rule in part because CMS has the right to put conditions on the Medicare and Medicaid money it pays healthcare facilities. The same argument could be given in the EO 14042 context. Selling to the Federal Government is a privilege, not a right, and the Government can condition payment on acceptance of any number of requirements (e.g., that products be manufactured in certain countries). But we don’t think that argument will carry the day. Again we come back to this:  If the Administration can’t use a workplace safety act to promote vaccinations/masking/testing in the workplace, we doubt the Court will let it use a procurement act.

Moreover, if all three Courts of Appeals decide to maintain the current EO stay, then it’s quite possible the Supreme Court would not entertain an appeal in any event, because there would be no circuit split to resolve.

But let’s get back to the ETS.

The January, 13 2022 decision is not necessarily the end of the ETS. The matter before the Supreme Court was a hearing on an injunction. The Administration could decide to continue fighting the matter on the merits, which would send the whole thing through the court cycle yet again (with an injunction in place, of course). But we doubt it will choose that approach. The Court’s decision strongly suggests the Administration will lose a trial on the merits. Thus, rather than fight that fight, we suspect OSHA will go back to the drawing board and rethink/rewrite the ETS.

The Court did leave the door open a crack for a reformulated ETS. In short, the Court will be looking for a regulation that is less “indiscriminate;” one that focuses on occupational health and safety rather than operating as a “general public health measure.” As the Court concluded its decision: “Although Congress has indisputably given OSHA the power to regulate occupational dangers, it has not given that agency the power to regulate public health more broadly.”

Further, as President Biden announced, he’s also looking to individual states to implement the requirements of the OSHA ETS. Meaning, he’s hoping the 22 states that have State Plans could implement their own ETS’ that mirror the OSHA ETS. To date, none of the states have followed OSHA, but only time will tell.

For additional thoughts/analysis regarding the Supreme Court’s OSHA ETS decision, you can check out our Labor and Employment colleagues’ blog here.

The CMS Rule

In a companion decision, the Court upheld the CMS Interim Final Rule 5-4, terminating the preliminary injunctions previously issued for 24 states by lower courts in the Eastern District of Missouri and the Western District of Louisiana. This means the CMS vaccine mandate now is in full effect for all states except Texas (which was not part of the cases before the Court). Interestingly, Justices Roberts and Kavanaugh switched sides from the ETS ruling.

The Court held that CMS long has had the authority it exercised in imposing its Final Rule, and that these unprecedented circumstances should not be grounds for limiting that authority. Obviously, this ruling feels quite different from the Court’s ETS ruling, so let’s drill down just a bit to see what drove the different result.

The Court based its CMS holding on two main points:

  • First, the Court found that Congress clearly authorized CMS to put conditions on the funding it provides to Medicare and Medicaid-regulated facilities. Because CMS found the vaccine mandate necessary to protect patient health and safety, the Court held the mandate “fits neatly within the language of the [authorizing] statute.”
  • Second, the Court held that the mandate was within the “zone of reasonableness.” The Court found the administrative record sufficient to explain CMS’s rationale for the mandate and accepted that getting the mandate in place ahead of winter and flu season was good cause for skipping the notice and comment period.

Justices Thomas, Alito, Gorsuch and Barrett dissented, arguing that requiring healthcare workers to undergo a medical procedure was more than CMS could require in administering Medicare and Medicaid. The dissent argued that the “hodgepodge of provisions” the Government and majority relied upon did not establish a clear intent by Congress to allow for such mandates.

Dissent notwithstanding, the CMS vaccine mandate is back, and those entities covered by the Rule should start implementing the applicable vaccine requirements promptly. If you are in any state but Texas, CMS likely will begin enforcement in about a month.  But keep in mind this is not the end of the road. The Court’s holding only means that the CMS mandate is in force while the 5th and 8th Circuits complete their review of the underlying state challenges. While the Court’s opinion sends a strong message to the lower courts, there is no guarantee those courts will hear that message, which could restart the appeal cycle once again.

For more information regarding the CMS ruling, you can access our Labor and Employment colleagues’ blog here.

What Do We Do Now?

Now that the ETS is dead in the water, businesses should consider the following:

  1. Stop enforcing the ETS. This may require rescinding previously issued company policies.
  2. If you want to continue mandating vaccinations, make sure you are doing it in a state that allows it.
  3. Continue NOT enforcing the EO.  Remember, the EO is not implicated by this case and still is enjoined. Again, if you want to continue enforcing a vaccination/masking/testing requirement, be sure to do so in compliance with state law.
  4. If you are in the healthcare field, start or continue abiding by the CMS Rule. The Court revived the CMS Rule in all states but Texas.
  5. Yet again, prepare another communication to your employees and/or your vendors as they will have a lot of questions for you when they wake up to all the “vaccine mandate overturned” headlines tomorrow.

And, finally, consider buying a neck brace since this wild ride is far from over, and the whiplash of these off-again-on-again rules could start all over again if/when the Administration makes its next move.

Additional Reading . . .

For those interesting in diving deeper into ETS ruling, here is a brief summary of the Supreme Court decision.

Majority: Roberts, Kavanaugh, Gorsuch, Barrett, Alito, Thomas (unsigned opinion)

The right-leaning majority found that OSHA’s enactment of the ETS violated the Major Questions Doctrine, and therefore reinstated the nationwide injunction previously granted by the 5th Circuit.

The Major Questions Doctrine requires “Congress to speak clearly when authorizing an agency to exercise powers of vast economic and political significance.” The majority found that Congress failed to clearly authorize OSHA to implement “broad public health measures.” Rather, the majority reasoned that Congress granted OSHA the authority only to set workplace safety standards, and, while COVID-19 is a risk that occurs in many workplaces, according to the Court, it is not an occupational hazard.

Instead, the majority likened the COVID-19 pandemic to other “universal” risks, like “crime, air pollution, or any number of communicable diseases.” The majority explained that OSHA does not have authority to regulate such universal risks, yet the far-reaching ETS “operates as a blunt force instrument” – drawing no distinctions based on industry or specific risk of exposure, and including only “illusory” exemptions to the vaccination requirement (that employers aren’t required to offer). Further, unlike other workplace safety regulations, the Court went on, vaccinations cannot be “undone at the end of the day,” and therefore the ETS “is strikingly unlike the workplace regulations that OSHA has typically imposed” (further supported by the fact that OSHA has never before issued a vaccination mandate under its ETS authority).

Accordingly, the majority held that the ETS “takes on the character of a general public health measure, rather than an occupational safety or health standard.”

As would become relevant in the companion CMS Rule decision, though, the majority conceded that in situations where COVID-19 is an occupational hazard – e.g., to “researchers who work with the COVID-19 virus” or to those “working in particularly crowded or cramped environments” – OSHA regulations are “plainly permissible.”

Dissent: Breyer, Kagan, Sotomayor

In dissenting, the left-leaning Justices disagreed with the majority’s analysis under the Major Questions Doctrine. The minority argued that OSHA not only was permitted to issue the ETS, but that OSHA’s statutory authority commands the agency to issue an ETS when presented with a grave danger like COVID-19. The minority cited vast number of deaths and hospitalizations caused by COVID-19, and argued COVID-19 presents “heightened dangers in most workplaces” regardless of industry due to the “common characteristics of many workplaces” – dangers best mitigated by the ETS requirements (not just vaccination, but mask-wearing and testing).

The minority argued further that OSHA’s statutory authority permits OSHA to “protect employees from all hazards present in the workplace,” and that “it does not matter whether those hazards also exist beyond the workplace walls.” In fact, OSHA routinely regulates hazards that exist both inside and outside the workplace (e.g., excessive noise, unsafe drinking water, and fire hazards). The minority blamed the far-reaching impact of the ETS not on the way it was drafted, but rather on the “scope of the crisis” – noting that “COVID-19 has affected—indeed, transformed—virtually every workforce and workplace in the Nation.”

In light of significant impact, the minority criticized the majority’s reading of OSHA’s statutory authority as “perverse.” In arguing the Court should have deferred to the regulatory experts in workplace safety, the minority reminded their colleagues that justices are “elected by, and accountable to, no one,” and that “When we are wise, we know enough to defer on matters like this one… Today, we are not wise.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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